How to Do Swing Trading
Table of Contents
- General Information and Objective
- Swing Trading Rules
- Manual Stock Selection
- Importance of Expiry
- Cash and Future Trading
- Using a Back Tester
- Examples: Bharat Forge and Bajaj Finserv
- Conclusion
General Information and Objective
- Swing trading is a strategy to profit from good movements in a short period.
- Focus on key points like support and resistance.
Swing Trading Rules
- Select Strong Support and Resistance
- Choose stocks as close to monthly expiry as possible.
- Buying in Cash, Selling in Futures
- Buy in cash and sell in futures.
- Identify Market Consolidation
- The market consolidates near expiry, reducing the movement.
Manual Stock Selection
- Select and filter stocks manually.
- Focus on support/resistance levels.
Importance of Expiry
- The closer the expiry, the lesser the movement. Better selection in the first 10 days.
Cash and Future Trading
- Use cash for buying.
- Can sell in futures. Orders should be normal or delivery type.
Using a Back Tester
- Check old data using a back tester.
- Identify strong support and resistance levels.
Examples: Bharat Forge and Bajaj Finserv
- Bharat Forge
- Found strong support at 957 on July 1.
- The support was strong, but lack of weakness meant it could be sold.
- Resistance was at 1700, with an entry indicator showing potential fall to 1600.
- Bajaj Finserv
- Found support at 1158 on July 1.
- Signals of fall on support due to weakness, indicating selling instead of buying.
Conclusion
- To be successful in swing trading, it is essential to study support, resistance, and volume/OI deeply.
- Maintain balance between strong support and resistance.
Important Points
- Strong Support: OI should be strong, no downside weakness.
- Resistance: Keep resistance away, should be distant from support.
- Space: There should be ample space between support and resistance.
- Support and Resistance: There should be no weakness.
Other Tips
- Select data at the right time.
- Pay attention to market conditions, such as Nifty being in overbought zone.
