So what the heck has been happening in the market?
This was Monday’s headline in the Wall Street Journal:
Basically, the Japanese stock market, measured by the Nikkei index, fell by 12%, marking its worst day since 1987…
That led to a market meltdown in the rest of the world, including here in the U.S., where all three major indices fell by more than 2.5%.
This followed a rout that began last week. Tech shares have been selling off amid disappointing earnings and market concerns that we are in an AI bubble.
And all of that was exacerbated by last week’s weaker-than-expected U.S. jobs report.
There was already a lot going on, and then the Bank of Japan recently raised interest rates into positive territory for the first time in 17 years.
This made something called the “carry trade” in Japan much less attractive.
So what is a “carry trade?”
It’s when an investor borrows in a currency with relatively low interest rates, i.e., Japanese yen, and uses the proceeds to invest in higher-yielding assets somewhere else. This type of play has been very popular over the last few years.
Well, the party was over on Monday when these “carry traders” decided to unravel their investments as higher Japanese interest rates made those bets much less profitable.
Monday brought the perfect storm to global markets and it wasn’t pretty. And when this happens, I always have advice for my subscribers.
I go live every day at 8:30 am Eastern with my Premarket Prep and at 11 am Eastern with my Daily Double Down…
You better believe I had a lot to say on Monday.
And I gave more advice during my Market Update video that same day.
Market Update is something that goes out to my StockstoTrade Advisory members three times a week.
STA subscribers also get 3 new trade ideas each month, 5 watchlist plays every week, and much more…
The market did slightly recover on Tuesday, but we’re going to have more days like Monday.
After all, we had a major pullback almost two weeks ago, and then the market rebounded the next day.
My point is that we’re probably in a volatile environment right now, so be prepared for more ugly days like yesterday.
And to answer the question that’s probably on everyone’s lips…
On ugly market days, day traders are often better off sitting on the sidelines and waiting for things to settle down…
And sometimes, on days like this, there are low-float, low-priced intraday plays out there if they make sense and aren’t moving in tandem with the overall market.
In fact, Oracle, our proprietary algorithmic trading tool knows how to identify potential winners, no matter what’s going on.
Every morning, it scans the entire market for patterns and trends and then applies its algorithm to produce a list of 20 names with bullish and bearish signals and corresponding entry prices.
And it gives us potential winners every single day…sometimes really big winners.*
Even on Monday, it alerted us to two long trades that gained over 25%*, despite the debacle everywhere else.
But for people who don’t want to day trade in an unpredictable market and also don’t want to wait months and years for a return on a buy-and-hold strategy, there’s another approach…
I’ve talked about this strategy many times before, and use it myself in addition to day trading…
It’s called swing trading.
Swing trading is a popular short-term trading style that’s a happy medium between day trading and long-term investing.
Whether you’re looking for a temporary shift away from day trading during a choppy market or a strategy that just fits better with your lifestyle, you might consider this approach.
Table of Contents
What is swing trading?
Swing traders hold positions longer than one day, sometimes for weeks or even months.
Unlike day trading, where you have to be glued to your computer to track intraday price movements, swing trading focuses on overall price trends.
Swing trading is really about sticking to a well-thought-out plan through the market’s ups and downs.
While day traders react to the market using a trading plan and technical indicators, swing traders pay more attention to a stock’s catalysts, fundamentals, and long-term trends.
My top technical indicators for swing trading:
Support and resistance triggers identify price points a stock won’t go below (support) or above (resistance).
These can also be applied across a whole sector or market cap, i.e., mid-cap stocks.
To learn more about support and resistance, watch my video:
Short-Term Moving Averages simplify price movements and reveal trends.
Below is an illustration of moving averages of different time frames.
What are the pros and cons of swing trading?
The pros of this approach is that it moves at a more relaxed pace, giving you time to make more informed decisions and the potential for better stability in your trades.
Swing trading is great for many people but it still has its drawbacks. Like any form of trading or investing, it has its risks and negative aspects…
The market can suddenly move in an unanticipated direction when you’re not paying attention. That could lead to big losses.
And remember you’ll probably see slower account growth than you’d typically see in day trading.
Choosing stocks for swing trading:
Scan for promising patterns or base your choices on news or hot sectors.
Mid- or large-cap stocks might be better for less active traders. Make a watchlist or several based on what looks promising to you.
Remember, fundamentals and long-term trends are key here.
Being on top of all the financial news at once can be tedious.
Here at StockstoTrade we have a service that does most of the heavy lifting for you.
It’s a chat room that alerts traders to news and other company and industry announcements many times before anyone else sees it.
And it’s no ordinary chat room because it’s led by Wall Street veterans, each with over 20+ years of experience.
Get breaking financial news before anyone else.
My final thoughts…
The current market environment makes day trading a little intimidating…
If that’s the case for you or you just don’t want to micromanage your trading, swing trading might be your solution.
This strategy involves longer holds than day trading, so you must research stocks and use technical indicators and fundamental analysis to track trends.
Fortunately, our in-house AI trading tool, IRIS, takes much of the work out of your preparation…
And best of all, it was designed with swing trading in mind.
As a subscriber to our IRIS system, you get weekly live training sessions, an ASI-generated watchlist, weekly analyst reports, and much more.
Find out how IRIS can make you a successful swing trader.
Have a great day everyone. See you back here tomorrow.
Tim Bohen
Lead Trainer, StocksToTrade