Sometime back we looked at the basic philosophy behind swing trading . In that post we also looked at some of the books on swing trading. In next series of posts we will look at some of the details of method discussed in these books.
We will start with Dave Landry. The basic idea behind all the Dave Landry set ups is "pullback" in a strong thrust. The objective is to capture the thrust after the pullback. The method works only in stocks with momentum.
Like every other swing trader the methodology looks for a trend and then looks for a place to enter it. the objective is to:
Capture a short term thrust
sometime to hit a home run
According to Landry there are three phases of trend that can be traded:
He uses ten setups to identify such low risk entry points. He has over the years identified ten such pullback set ups. Setups are set of conditions which needs to be satisfied for a stock to be considered for a pullback entry. the ten set ups are:
false rally pullback/trend pivot pullback or second entry pullback
accelerating momentum strategy
explosion gap pivots
Reversal gap strategies
This week we will look at some of these set ups in detail and how one can possibly build scans for them in Telechart.