Short Swing Trade Example : CMA | stockbee


Short Swing Trade Example : CMA

Stocks often move in 3 to 5 days momentum bursts . This phenomenon works also on short side. Magnitude of short moves can in many cases be smaller than on long side. And short side is punctuated by man sharp counter trend moves so trading short requires some adjustment.

For short sell I like to find a point from where stock is not extended to downside. CMA was such candidate on entry day. On entry ay it showed up in range expansion scans I run. I shorted it.

A good momentum burst swing trade should work immediately. CMA did that . It followed through to downside immediately for next 2 days. As market was overextended to downside and vulnerable to bounce, I closed the trade yesterday.

In a year hundreds of such 3 to 5 days moves is what I look for. These kind of swing trades supplement hunt for longer duration trades. Longer duration trades like Episodic Pivots trade that go up 50% plus in a quarter or 2 are not common, while everyday I hunt and actively look for those position trades, in the meanwhile a 3 to 5 day swing trade offers me bread and butter trades on regular basis. Several hundred such trades add up over period of time with small gains regularly compounded.

To find trades like these I daily run a range expansion scan that looks for stocks that had bullish or bearish range expansion compared to their last 3 days range. Once candidate show up I look for a swing setup that is likely to work for 3 to 5 days. The stops in these kind of trades are pretty tight and are at high or low of the entry day depending on whether it is long or short trade. 

No comments: