Last week 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.
The next pattern which Dave Landry likes is Trend Knockout and which once you understand it will find to be a very common pattern in strongly trending stocks. Strongly trending stocks often have sudden shakeouts that knock your stops and then the trend resumes all over again. You would see this everyday in strong stocks. Trend Knockout enters such stocks post trend resumption.
Again he gives you the basic concept , you have to take it to the next level. From a concept to tradable strategy.
The set up conditions are very simple:
The stock should be in very strong uptrend, ideally in a persistent uptrend
The stock should trade below at least the two prior lows.
Get long above the high of prior lows (2 above)
Place protective stop below the low of the correction
Now this is the basic concept. Not everything is spelled out completely. But there is enough to recreate a scan. How can this be done in Telechart. If you think through each condition you can build a scan which will help you find such stocks.