I’m Not A Swing Trader

Even though most of my trades are supposedly swing trades, I don't think I know the first thing about swing trading.  In fact, I don't know the first thing about price action.  Well, I know a little but certainly not enough to be successful.  I was reading through the forums last night and came across a webinar by Linda Raschke on price action and swing trading.  Reading articles and forums are great but watching videos can teach you so much more.

I found this video to be very helpful and I'll post the notes I took while I watched it:

• Trends
  have greater odds of continuation than reversals
• a trend
  seldom reverses without warning

trend
behavior

• once a
  trend is established, it takes considerable power and time to turn it
• a major
  trend seldom reverses without warning
• the
  absence of any pattern or swing in the price implies a continuation of trend
• trends
  tend to begin out of a low volatility environment

Very important

• momentum
  precedes price
• if
  momentum makes a new high or low, the odds are that the price high or low is
  still to come
• a
  trader should look to establish a position on the first reaction following a
  momentum high/low
• there
  are usually at least 3 impulse moves in the direction of a trend

How to
see if momentum decreasing or increasing?

• by eye,
  when downswing is greater than previous upswing, market is telling you that
  supply demand imbalance to downside
• when last
  downswing greater than previous downside, momentum is increasing
• when last
  downswing is less than previous downswing, lessening momentum
• lessening
  momentum doesn't imply reversal, just that you may see some consolidation
• need lower
  lows in indicator (momentum) and lower lows in price
• the
  longer the sideways line, the greater the potential move

Technicians
job

• what
  is the trend on the current time frame?
• what
  is the trend on higher time frame?
• what
  are support and resistance levels?
• is
  the market in a trading range or trending following a breakout from a range? 
• is
  the market in a range, is it moving from the high of the range to the low or
  low to high?
• if
  the market is trending, is there an increase in momentum or a decrease in
  momentum

1. what is the main play - based on existing
   structure; looking for small or bigger play
2. risk
   defined by swing lows or swing highs

• higher
  high and higher low after downtrend indicates a possible reversal.  Warning!!!!  At the point that the higher high is taken out, we have a reversal

• flag
  formation occur in trending market
• trading
  with the trend

simple
bull and bear flags

• 
  do
  not look for flag formations in a trading range environment
• do
  not look for flag formations after a buy/sell climax

• work the
  market from 1 side

I would recommend you check out the webinar yourself: 

http://www.cciclub.com/marketvu/linda-raschke-swing-trading.html

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