Chart Reading
You might be wondering what the fuck swing trading is? Or what defines a swing trader and why are they always reading so goddamn much? (pro tip: read books!)
We, as swing traders focus on momentum on a longer time frame. We don't give a shit about the fundamentals, we let the chart tell the story. Now, that’s not to say we’re completely naive about our stocks. We always know what they do, their sector, when they have earnings, their forward guidance, etc. However, we are not calculating a stock’s PE before we buy a breakout. We’ll leave the fundamentals to the dumb money day traders who will read an annual report for two weeks to trade a name for a $.20 scalp on a 1 min chart.
Swing traders focus on their technical analysis skills and their use of human psychology as their main edge.
Let's test your skills real quick, take a look at a chart below and ask yourself, “Who’s fucked?”
Trading stocks is a lot like a beauty contest. What looks best, wins.
Now take a minute and read this chart, who is fucked? Is it day traders? Maybe it's swing traders? Or hedge fund managers? Yeah it's them, fuck those rich pricks! Now it might be some of them, however do you know who is really fucked? Anyone short. Plain and simple. If you are short Amazon, have any puts betting against it, at this very moment, you are fucked plain and simple. Now let's try this game again.
Adding to a losing position is one of the best ways to end your trading career
(Click on image to see a larger chart of XON)
Take a minute and think of who is fucked? Virtually everyone long this name is fucked. If you got long on the IPO day and held, fucked. Bought into support? Fucked. Bought breakouts? Fucked. Bought pull backs? Fucked. Short term swing trader still holding? Fucked. Long term investor? Fucked. The only people who are not fucked are the people who bought today, if you bought this stock on any of the other 1200+ days this name has been public and still have it you are fucked.
Virtually 99% of the crowd who bought this stock are fucked. They’re all waiting patiently to get out near breakeven. Now on the flip side anyone who is short this fucker and still holding is sitting pretty, for now.
Here are a few rules we live by when it comes to the trades we put on:
Most amateurs are looking for hype or rumor to get in early as the market opens to get the best price which ultimately leads to faster losses. This is why we tend to let the market settle out for the first 15 minutes to shake the pikers out. You will even see it in the group chat, when someone asks about a stock that has been on a tear, the Alpha chat tends to be net sellers on that news where the newer trader is just looking to get in. Same on the flip side when no one cares about the name flagging because that's boring, the new guy needs volatility, we quietly load up and sell into his excitement. Rinse and repeat.
The market is always right
(Pro Tip : If you are long a stock and it ends at the high of day, it is usually worth a hold, conversely if said stock is selling off and ends at the low of day, it's usually a big fucking red siren telling you that you’re wrong as shit and should be looking for the exit.)
Do you have balls?
Now it's your turn to go do some homework and test your Chart Reading skills. Go and find one chart where anyone long is fucked and find a chart where everyone short is fucked and post them in the Group Chat.
For the chart of anyone long who is fucked, posted a screenshot of the daily chart with the caption “anyone who’s long is fucked”.
For the chart of anyone short who is fucked, posted a screenshot of the daily chart with the caption “anyone who’s short is fucked”.
POST IN THE WHAT’S NEXT CHAT