How to Swing Trade Stocks: The A-Z Swing Trading Course | Travis Rose | Skillshare

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How to Swing Trade Stocks: The A-Z Swing Trading Course

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Taught by industry leaders & working professionals
Topics include illustration, design, photography, and more

Watch this class and thousands more

Get unlimited access to every class
Taught by industry leaders & working professionals
Topics include illustration, design, photography, and more

Lessons in This Class

13 Lessons (1h 30m)
    • 1. Introduction

      2:13
    • 2. Swing Trading vs. Day Trading

      6:16
    • 3. Technical Analysis Basics

      7:27
    • 4. Support & Resistance

      5:34
    • 5. Market Trends & Trendlines

      8:00
    • 6. Momentum Trading Strategy

      9:35
    • 7. Stock Market Reversal Indicators

      8:12
    • 8. RSI Trading Strategy

      9:56
    • 9. Swing Trading Chart Patterns

      8:16
    • 10. Price Targets

      6:41
    • 11. Risk Management & Cutting Losses

      8:22
    • 12. Scanning For Trades

      6:27
    • 13. Diversifying Your Portfolio

      3:17
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About This Class

How to Swing Trading Stocks: The A-Z Swing Trading Course access also includes several valuable market resources and a free stock trading ebook download with bonus in-depth trading strategies, tips, and education! 

This online course is designed to teach new traders how to get started swing trading step-by-step. You'll learn how to read and interpret price action to gain an edge over your competition in the market. Additionally, we'll be covering several swing trading strategies that are effective and easy to understand!

You'll be learning from a self-taught, full-time trader and investor on a mission to help others avoid the same mistakes that he made early on in his career. The strategies and techniques that I teach within this course are the same ones not only used by myself but also the same ones that are used by countless successful investors around the world!

If you're interested in taking advantage of the unlimited potential that swing trading offers... this course is exactly where you should start!

Some What You'll Learn:

  • Swing trading vs. day trading + pros & cons

  • Technical analysis basics

  • Find & use support & resistance

  • Market trends and using trendlines

  • Momentum trading strategy

  • Determining price targets & risk levels

  • Stock market reversal indicators

  • RSI swing trading strategy

  • Scanning & screening for trades

  • Diversifying your portfolio

  • + MORE!

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Transcripts

1. Introduction: Hey traders, thanks for checking out this course. My name is Travis. I'm a full-time day trader in investor in the stock market and I'm going to be your instructor today for this swing trading course. Now before getting started, I wanted to quickly discuss some of the things that we're going to be talking about within this course. So that way you can preview the content that is going to be taught and make sure that this is the right course for you. So with that being said, this is going to be a beginner friendly course. So if you don't have any experience with swing trading or trading in the stock market in general, you're not going to feel lost later on in the course once we start talking about the real trading strategies. Because we are going to start from the base. So we're going to start off with the differences between swing trading and trading and other types of trading, as well as the pros and cons of each. We'll talk about some of the basics of technical analysis. So that way you can start to learn how to read price action on your charts. I'll show you exactly how you can look at charts and quickly find levels of support and resistance. You'll learn how to identify market trends and use trend lines in your own trading. Following that section, we're going to talk about a momentum trading strategy that actually uses market trends and trend lines. Do then go into learn exactly how you can determine price targets in risk levels on your trades. Because of course, having a good exit on your trade is going to be equally as important as having a good entry. Then going to learn about different stock market reversal indicators. We'll talk about the RSI and the RSI swing trading strategy that I've used over the course of my trading career to help me make thousands of dollars in the market. I'll show you how you can actually scan in screen the market for trades meeting your exact criteria. And of course, how to actually take those stocks that in diversify your portfolio in a way that is going to help you manage your risk and maximize your potential returns in the market. Okay, So with all that being said, if you want to learn how to invest your money and make your money work for you with low stress swing trading strategies, this course is the perfect place to start. So without further ado, let's go ahead and get started right now with lesson number one. If you have any questions along the way, please feel free to reach out to me, whether that be by email or using the Q&A section of the course. And I'd be happy to answer any questions that you have along the way. 2. Swing Trading vs. Day Trading: All right, So to start off the course, I wanted to simply talk a little bit about what exactly swing trading is and go over some of the ways that this is going to differ from other trading styles. Now one of the other very common ways that traders look to take advantage of the price action in the market is by doing what is known as day trading. The trading is essentially going to be exactly what it sounds like. It's getting in and out of positions in a very short period of time within the same day. That can be anywhere from a couple of minutes to a couple of hours. But as long as that position is being closed within the same day that it's opened, that's going to be considered a day trader. Now in order to successfully day trade, you really need one of two things. The first is going to be a large amount of money, because if you're in and out of these positions so quickly and you're trading stocks that maybe don't have a lot of volatility and trade within a pretty small range on a day-to-day basis, then you're going to need a lot of money to make a worthwhile profit. And those kind of stocks or alternatively, and this is the way that most day traders seem to gravitate. You could look to focus on highly volatile stocks, ones that move large percentages on a day-to-day basis, whether that be 10 percent, 20 percent, sometimes even 50 percent or more within a single day. And by doing that, you don't need as much money to make the same amount of dollar profit as you would by trading a stock with much less volatility. Okay, so because of that, hours are generally going to be drawn more to these highly volatile stocks in order to really take advantage of these quick price fluctuations in the market. And I do actually personally have a lot of courses that are dedicated to day trading. But this one is of course dedicated to swing trading. And swing trading is when you're holding those positions anywhere from a few days all the way up to a few months. So of course, this is a little bit longer term than day trading, but it is still much more short-term in a lot more of an active trading style and any kind of long-term investment would be. Now aside from the length of time that you are holding these positions. Another difference between swing trading and day trading is that with swing trading, and most of the time you're going to be avoiding the highly volatile that a lot of day traders focus on. And we're going to be looking to invest in much more stable and consistent stocks. And our investments are of course going to be made on the strategies that we'll talk about later on within this course. But for now you just need to know that we're going to be looking for these less risky investments in order to swing trade them and take advantage of their price movement over a period of anywhere from a few days all the way up to sometimes a few months. Now with all that being said, benefits here of swing trading as opposed to other trading styles, is first because of the types of stocks that we're focusing on, we're going to see a lot less volatility in our actual portfolios. And this less volatility also kind of goes hand in hand with the lower risk. Again, this is just because we're focusing on these more stable and more consistent stocks. And we're avoiding the ones that have a lot of risk in a lot of potential reward, which is exactly what a lot of day traders focus on. Another big benefit to swim trading is all of the free time that comes along with it. Most of the time with swing trading, you can focus on looking for your best swing trades and your best upcoming investments at anytime of the day, whether the market is currently opened or even if it's closed, you're going to learn how to scan the market for these investments. And once you find them, you don't need to be constantly watching every single little price fluctuation in that stock, which unfortunately is something not a lot of day traders do have to do. The next benefit to swing trading is you really don't need any fancy trading platforms or even any advanced indicators. You can use a very simple brokerage platform as long as you're able to look at charts in C, the basics of technical analysis, that's going to be more than enough to get started with your swing trading. And last but not least, even though a lot of brokerages now are completely commissioned free, there is a big benefit here to actually save on commissions because some of the better brokerages, if you decide to go with one of them, do still charge commissions each trade and has a very active day trader. Those conditions are going to add up very fast since you're constantly going to be in and out of positions. But of course, with day trading, since you're going to be in and out of positions much less frequently, that's going to mean that you're going to be paying less than commissions and keeping more money in your pocket by doing so. Alright, so very quickly, just to show you here some of the potential of swing trading, I wanted to show you a compound interest calculator. And really this is just to kind of motivate you because I know a lot of people get started with swing trading. And they seem to think that because they're starting with the small amount as their initial deposit into their brokerage account. It's going to take them forever to actually see any big profits in the market. Because of that, a lot of people that start swing trading end up moving onto day trading to look to take advantage then of those highly volatile stocks, which ultimately is a much more risky way to get into the world of trading and into the stock market in general. So let's just go ahead and say that you're starting off with $5 thousand. On top of that, you're not going to be adding in any other money other than that initial $5 thousand investment. So we're gonna go ahead and look over a period of one year, which is of course 12 months. And we're going to say that each month you're able to have a 20 percent return on your account. Now just by doing that with your initial $5 thousand investment at the end of 12 months or at the end of the year, your account would be up to about $54 thousand 12 more months giving you a total of two years into account would be up to $584 thousand, just from that initial $5 thousand investment, again, making about 20 percent per month and then reinvesting those profits into future swing traits. Now believe it or not, 20 percent per month is definitely something that is achievable even though it is very ambitious. And these type of returns happen much more commonly than you may believe. So hopefully this motivates you that if you are starting with the smaller accounts, you don't need to shoot for any massive returns on your trades. The small and consistent profits are going to add up over time. And it may only take a year or two for you to see some serious profits start to build up in your investing account. So I'm gonna go ahead and link these compound interest calculator in the following lesson. In case you do want to check it out in plug-in some of your own numbers. 3. Technical Analysis Basics: All right, Now here in the beginning of this course, I did want to start off with some of the basics of technical analysis. And that's because later on in the future of this course, once we start talking about these specific and more advanced trading strategies, it's going to be very important that you do understand the basic concepts of reading charts and looking into technical analysis. So with first and foremost, technical analysis is going to be a financial analysis type using patterns in market data to identify trends and make predictions. So anytime anybody is talking about charred patterns, trend lines, Volume, indicators, order flow, and so on and so forth. All of those things fall into the category of technical analysis. And all of those things are going to be used in order to make up strategies for swing trading. Now just as a comparison, another very common type of analysis is known as fundamental analysis. And this is going to be the analysis of a businesses financial statements. So things like their revenue, their earnings per share, or EPS, their operating expenses, and so on and so forth. Really anything that you can find with any company's earnings report that is going to tell you how well that company is financially performing. That's all going to fall within the category of fundamental analysis. And although both of them can be very beneficial for analyzing a stock and looking for potential swing trades. For the most part throughout this course, we're going to be focusing on technical analysis and looking more into the price action in different chart patterns and trends. Now with all of that being said, one of the main components of technical analysis that can really be thought of as the foundation of charts in chart patterns is going to be the candlesticks. And these candlesticks that you see on your charts are made up of four main points. Being the opened, the high, the low, and the clothes. So to kind of state the obvious, of course, if it is a green candlestick, that means that it open at a lower price than it closed. So in other words, while the candlestick was still open, the price action went up. And if it is a red candlestick, that just means that the price action went down within that period of time in the candlestick closed at a lower price than it opened. Now that means section of the candlestick that is either going to be red or green is known as the real body of that candle stake in for the most part, you're also going to see a line that is sticking out from the top and the bottom of these real bodies, which are known as the upper and lower wick. And those simply show us the highest and the lowest price that the stock went within that period of time before that candle stay closed. Now it's very important to understand that these candlesticks can really represent any different period of time. And that's going to depend on the timeframe of your chart that you're looking at. So to kind of explain what I mean, if I go over to thinkorswim very quickly, this is a very commonly used charting system. You can see that I have two separate charts up here, both of them being for the same stock. The only difference is that they're looking at different timeframes. Over here, I'm looking at the daily chart. So that simply means that each of these candles is representing an entire day of price action. Showing us the open, the high, the low, and the clothes for that entire day. Now over here on the right side of the screen, again, this is the same stock, but in this case, we're looking at the five-minute time frame. So that just means that each of these candles is now representing just five minutes of price action. Again, still showing us the open, the high, the low and the clothes for that period of time. But in this case that period of time happens to just be five minutes. And what you're going to realize throughout your technical analysis is that the timeframe of the chart has a lot to do with how that chart pattern is actually going to play out. For example, if you see a chart pattern over here on the right side of the screen, on a shorter timeframe like the five-minute. Most of the time, that pattern is going to take a much shorter amount of time to actually play out into completely form compared to one that is seeing over here on a longer time frame, such as the daily or even weekly chart. And for that reason, one of the main timeframes that a lot of people that are doing swing trading focus on is something that is kind of midterm. It's not necessarily very short-term, like the one minute or five minute. And it's not very long-term like the daily or weekly. And that happens to be the four our chart. The four hour time frame is really nice because it does often leads you trades that you hold for anywhere from a couple of days, sometimes up to a couple of weeks, which is really exactly what most people are looking for when they start to get into swing trading stocks. Now moving onto something that ties in very closely with candlesticks on our charts. And that is actually going to be supply and demand. Now believe it or not, supply and demand is actually the sole reason for price fluctuations in the stock market. A lot of people think that something like news or press releases are the sole reason that stocks go up or down. But at the end of the day, what those things do is actually just influenced the amount of supply and demand for that stock, which is then what directly causes the stock price to move. So if there happens to be stronger demand or stronger buying at a specific price for a stock than there is supply or selling, then that demand is going to cause the price to rise from that area. On the other side of the spectrum, if there happens to be stronger supply or selling in the race demand or buying, then the prices are going to fall from that area. And a very helpful thing about looking at candlesticks in doing some basic technical analysis is that candlesticks and really help us visualize levels of supply and demand. Now of course, because green candlesticks represent price action that is going up, that is going to represent that they're a strong demand in that area for that stock. On the other side of the spectrum, red candlesticks going to the downside tells us that there is a lot of selling going on, meaning there is stronger supply than there is demand. And that's really what is causing the bearish price action that we see over here on the right side of the screen. Now additionally, candlesticks can also help us look for reversal points in the market by showing us when sellers or supply is starting to overtake the demand or buying and vice versa. They can also show us where buyers or demand are starting to take control of the market in the seller's or supply is starting to get weaker and weaker. Many times how we can spot that is by looking for price action that is cruising slowly and steadily to the upside. And then all of a sudden we start to see long upper wigs on our candlesticks. Which simply means that sometime within this period of time, the price was able to reach about these highs. But because there was not quite enough to man, it was not able to sustain that move. And at some point the seller is, or the supply starting to take control and push the price back down before that candle stay closed. So when we start to see these long upper wigs form on our candlesticks many times that is a reversal point indicator. So if you happen to be in a position at the time, that can often be a great indicator. Choose cell and lock in your profits on that trait. And of course the same is true, but with the downside. If we are cruising down with multiple read cannibals in a row. And then we start to see some long lower wigs on our candles. That tells us that the demand is starting to take control in that area. There's not quite as much selling or supply as there was before. And that can often lead to a bounced back up in the price, which is of course something that would give you confidence to buy into the stalk and then be able to sell at a higher price for a profit in the near future. 4. Support & Resistance: Now carrying on here with these simple concepts of technical analysis, before we start to get into the strategies in the more advanced patterns, it is important to know about support and resistance. Now very simply put, a level of support is going to represent a price level where a stock historically has a difficult time breaking below due to stronger demand or buying than there is supply or selling. And because at a level of support, the price has a difficult time breaking below is going to, of course lead to a great opportunity to buy into the stock at a low price before it bounces back up, giving us an opportunity to sell them at a higher price for a profit. And many times I can look exactly like what we see down here on the diagram at the bottom of the screen, will see a stock pulling back down and starts to bounce back up repeatedly from the same level. That level turns into a level of support. You can then go ahead and actually draw that line on your chart. And from there you can simply buy into the stock and profit once the stock is able to bounce back up off of that level of support. And other very nice thing about support is that if the stock happens to break below that support level after you did already buy into the stock. You can use that as a risk level as well. So if the stock happened to move back down below here, adds going to be a bearish sign for the stock was unable to hold on to that level of support. And again, you can use that as your risk level to then cut losses on nitrate and then potentially look to rebuild the stock down at a lower price. And this is really nice because it gives us a very clear level of risk every time that we buy at a level of support. So you don't have to buy and then be concerned about where you're going to cut losses if the trade happens to move against you. And if we take a look here at this chart, we have a real life example of a level of support. You can see that this is on the daily chart. So again, every one of these candles is representing one entire day of price action. And if we were to buy the stock on these green dots and then sell the stock up here on these red dots by simply buying at this port level and then selling into a bounce. You can see that there are three really great opportunities here to buy at the support level and then sell for a profit in the near future. Just by doing this very simple technical analysis on this chart. Since we now have support at the bottom of our charts as a level that we can use to actually buy into a stock. It's important to also have a level to sell out of our stock and lock in our profits on a trade without getting greedy and without having to completely guess when the right time to sell that stock is. And that's kind of where resistance is going to come into play. Resistance is essentially going to be the exact opposite of support. Which means that it's going to be a price level where stock historically has a difficult time breaking above due to stronger supply or selling, then demand or buying. So because of that, resistance is going to offer us an opportunity to sell out the highs and login our profits on a trade that we took previously. Or we can also look to short sell into a level of resistance, which is then going to allow us to profit from that stock actually coming back down. And again, to take an example here of a level of resistance on a real chart, let's just say that we happen to buy into this stock D HR during the middle of December here on this green dot. One of the big problems that new traders have is not knowing when to sell in lock in profits on their trade. And because of that, a lot of times they get greedy and they watched their winning trades turn into losing trades. So in order to prevent that, in this case, what we would do is look for a level of resistance, draw that up on our chart. And then we would look to lock in our profits just below that level of resistance, knowing that the price is naturally going to have a difficult time breaking above. And because of that, there's going to be a good chance that the price is going to start pulling back from that level of resistance. And that's exactly what happens in this example. So instead of getting caught in that pool back, what we would want to do is simply look to buy and then sell into that resistance level. And you have to remember if you're ever in a position where you start to feel like you want to make more on the trade. And you start to get a little bit greedy and wish that this was just going to break out above resistance. You can always look to rebuy in the future if the stock pulls back down. Or you can always look to you actually trade the breakout, which is something we'll talk about in the future of this course. But it's really never going to be a good idea to hold onto a trade. When it's running into a major level of resistance, It's always going to be in your best interests to lock in some, if not all of your profits at that level of resistance. Now to finish up this section talking about support and resistance, one very important aspect that a lot of new traders don't realize is that broken support can actually become a level of resistance in the future, and vice versa, broken resistance can actually become a level of support. So if we take the example down here on the left side of the screen, this doc, He's kind of bouncing around in holding this as a level of support. And we see that this dog breaks down below that support level. And as it bounces back up, that previous line of support is now becoming resistance. Same thing is true when there is initially a level of resistance. If this dog breaks out above that resistance and then starts to pull back down, that pass level of resistance can now become a level of support. And you would use this new support and this new resistance the same way that you would use any other level of support and resistance. Just like we talked about in the previous few minutes of this section. 5. Market Trends & Trendlines: Follow the trend. The trend is your friend. That's a short and simple quote from Jesse Livermore, who is a multibillion dollar self-made trader, an investor. He's one of the most well-known traders of all time. And he's made the bulk of his money by simply following the trend of the stock and going with that trend in going with that momentum. As opposed to somebody that is fighting the trend in trying to catch the exact top and the exact bottom of a move in the market. So the entire focus of this section of the course is going to be dedicated to market trends and spotting these trends and being able to draw trend lines on the charts to then be able to follow these trends and being able to ride the momentum that we see the market in real time. So with that being said, the first type of trend that we see in the market is known as an uptrend and pretty self-explanatory. This is going to be an upward moving trend created by a chart that is making both higher highs and higher lows. So as we know, stalks don't just go straight up or straight down. Whether they're in an uptrend or a downtrend, there's still going to have peaks and they're still going to have highs, as well as they're still going to have dibs and they're still going to have lows. When it comes to dealing with an uptrend. It's going to be defined by those peaks or those highs getting progressively higher and higher every single time. And the same is going to be true for the dibs or the lows. They are also going to progressively get higher and higher. And those two things, those higher highs and lows, are exactly what makes an uptrend in the stock market. So once you've actually determined that a stock is in an uptrend, and you're starting to realize that there are higher highs and there are higher lows. It's very beneficial to actually go into the tools on your chart and actually draw yourself a trend line on the chart itself. So that way instead of having to kind of imagine that there's a line there, you can actually draw that trend line in by connecting the lows or connecting the dips of an uptrend in stock. And what this trend line is going to do then is act as a level of support. So what we talked about in the previous section, of course, when we talked about support and resistance and all the different uses of those levels on a chart. Those are also going to apply to levels of trendline support and trend line resistance. And in fact, really that's exactly what a trend line is. It's just going to be a slanted level of support and resistance. When a stock is in an uptrend, that trend line is going to be at the bottom of the price action because you're connecting the lows. So that's when the trend line is going to again act as a level of support. So if we were to see this in real time, and we would look to take advantage of this just like we would any other level of support we would want to buy right at or slightly above the level of support, giving us the lowest risk as well as the best for a return on this investment. And then you can lock in profits as the stock bounces off that trend line and continues to go higher in the future. So very quickly I'm gonna go ahead and jump over to thinkorswim the platform from TD Ameritrade. This is going to be pretty much the exact same concept regardless of which trading platform you're using. But I just wanted to very quickly show you how you can actually draw these trend lines on your charts. So you can see right now we have a trend line drawn on the daily chart for Apple. I'm gonna go ahead and remove this. And if we go up to the top here, under drawings, you can see that there are actually many different drawing tools. But for a trend line, there's one that is specifically called a trend line. And you're just gonna go ahead and select that. And again, when we're drawing a trend line for an up trending stock, the way that we do that is by connecting the lows or the depths. So we're gonna go ahead and start at the lowest low for the trend line and start connecting all of those lows. And we end up with our level of trend lines support. Again, this may be slightly different if you are using eight different charting software. But for the most part, any different platform is going to offer the ability to draw and trend lines on your charts. So I do highly recommend that you actually draw them once you see a level of trend lines support. So that way you don't have to guess where that exact level is and you're going to actually be able to visually see it chart. So anyway, just to give you another very quick example of a trend line on a real chart. This is the chart for Microsoft. And we're looking at the chart for an entire year. And you can see that the first touch of this trendline support is all the way down here in the bottom left corner. But one thing to keep in mind is that if we were looking at the chart on this specific day, then all of these other candlesticks on the right of this candle are not yet going to exist. So we wouldn't necessarily know that this is going to be trendline support yet until there is another test of that level and until we have another low or another dip. So realistically in this case, we would have to wait till right around here or you've been around here before we can start connecting these lows and before we can start drawing this level of trend lines support. With that being said, Microsoft in this case does offer many different opportunities to buy at this level of trendline support. Because you can't see that every single time it does balance almost perfectly off of this trendline support and goes higher in the short term. And if you wanted to be in this a little bit more passively and longer-term. You can always look to buy into this trauma and support and hold for a much larger move over the course of months or even years. Now on the complete opposite side of the spectrum from an uptrend, we have, of course, what is going to be known as a downtrend. And a downtrend is really the polar opposite of what an uptrend is. It's just going to be a downward moving trend created by a chart that is making both lower highs and lower lows. So just like we have higher highs and higher lows with an uptrend in stock, we're going to have lower highs and lower lows in a downtrend in stock. And that's really what is going to define a stock being in a downtrend. Now, just like we want to draw a level of trendline support with an uptrend in stock. It's also very important to draw trend lines on a down trading stock. But the way that you do that in the case of a downtrend in stock, is by connecting the peaks or the highs, which is going to put that trend line above the current price action of the stock, meaning that it's going to act as a level of resistance. So trendline resistance is going to offer us an opportunity to sell if we do happen to be in the stock. Or you can always look to short sell into that trend line resistance to profit from that downward momentum that the stock is currently having. In a quick example of this is if we look at the chart for Alibaba, this is the chart over a one-year period as well. And you can see that there are multiple different occasions where the stock bounces into this trend line resistance. And every single time that it gets at that trend line resistance, close to it, the stock pulls back and continues to go lower. We see both lower highs and lower lows, meaning that this is of course, in a downtrend. So in other words, this would offer us some great opportunities to short sell into this trend line resistance. So that way we can, of course, profit from that stock coming down and reversing to the downside from that trend line resistance. So it's a very quickly recap and reiterate some of the important notes from this section. Again, it is very important to not fight the trend of a stock. In other words, that means that you want to avoid trying to short sell the top in a strong uptrend. And you want to avoid trying to buy the exact bottom in a strong downtrend. Instead, you want to go with the trend of stock. Which means if the stock is moving upward and it's in an uptrend, you want to look to take advantage of that upward momentum by buying into the stock at a level of trendline support. So as long as that trend line stays intact, you're going to be able to sell higher and make a profit on that investment in the future once the stock starts to bounce off of that trendline support. 6. Momentum Trading Strategy: Okay, so now that we've covered market trends and we've talked about how to actually draw and huge trend lines on your charts. I wanted to talk about one of the specific strategies that I use for my own personal swing trading. And it's a very simple one that uses the same concepts that we've talked about over the previous few sections of this horse. Now this is a momentum trading strategy, meaning we're looking to, again, take advantage of these up trends in the market. And we're going to look to ride the trend in rod the momentum using what is known as a price channel. And what these price channels are. Our patterns involving a stock that is trading between a defined level of trendline support in a defined level of trend line resistance. Very nice thing about this is the trendline support and the trend line resistance are essentially telling us exactly where to buy and sell the stock. So we're going to look to buy at that trend line support and then sell at the trend line resistance. And we're able to repeat this process over and over and over, as long as the price is remaining between the trend lines support and between the trend line resistance. So again, because this is a momentum trading strategy and we're looking to go with the trend of the stock. Just to reiterate what we talked about in the previous section, you want to avoid fighting the overall trend in a stock. So if it easy to downtrend, although you can still be profitable by buying at the trendline support and selling at the trend line resistance, like we see on the left side over here. At the end of the day, that would still be going against the trend. And you will still have a more difficult time than you would if you were looking to simply use the strategy with a stock that is in an uptrend. So step one for this strategy is of course to find stocks that are in an uptrend and then look to take advantage of that trend line support and trend line resistance and trade between those two, buying and selling over and over while the stock remains in that price channel. So now at this point you're most likely wondering how exactly you can find stocks that are going to be in this price channel. And there are really many different ways you're going to need some kind of different screener, some kind of scanner that you can use to find stocks that have been in an uptrend. And there are countless different options. Most brokerages are going to have a platform that has a screener or a scanner built into them for free. So if you're using thinkorswim, the platform from TD Ameritrade or something like E-Trade Pro. If you're using interactive brokers or if you're actually paying for scanner like trade ideas or equity feed, you're going to be able to do the same thing that we're going to do here in just a moment. But for this example, I want to use the website thin ms.com. And this is completely free to use. So you're going to be able to do exactly what I'm doing here in just a moment. And what we're going to do is go onto Finn does.com. We want to go up to the top-left section here and click on screener. And then I'm gonna go ahead and select the tab for technical is because this is going to show us all things related to technical analysis, which is involving the charts and different chart patterns in formations. So what we want to see first and foremost is that the performance over the past week has been at least 10 percent up. And that's simply going to tell us that the stock has been moving up over the past week, which is really the first step in finding stocks that are potentially in an uptrend. Next one I'm going to do is go over to all. So this is going to give us the criteria to filter down the market. And I'm just going to find stocks that are in the USA. I want them to be above $10 per share. And last but not least, I'm going to put the average volume at least at 500000 shares. So right away you can see that we've narrowed down the entire market to just 58 total stocks. All of these are going to be potentially in an uptrend and potentially in a price channel. So now what I'm going to do is just hover over this price tab over here. And just start looking at these charts to find stocks that are potentially in a nice uptrend. Before I can start doing some more analysis in looking if they have any trendline support and trend line resistance that we can use to start swing trading the stocks. Okay, so you can see that fn k o here looks to be a pretty good example. If we click on this chart, it does appear to be in an uptrend. We see higher highs and lows. And he does actually look like it is in a bit of a price channel right now. We have our trend line resistance. We're shown by this purple line. And this blue line down at the bottom is showing us our trendline support. So just like that, we've found a potential swing trade. And what I would do then is simply keep this on a watch list, maybe said some price alerts to actually notify me once the price gets down to maybe $22 per share, which is right about where the current level of trendline support is at. And once it's down near that trend line support, that's when I would look to take advantage of this stock buying into that trend lines support. And then of course later on, D2L up near the trend line resistance for a profit on this trait. Now another way that you can do this if you are using thin base, is if I go back now and if I go ahead and This criteria, what I'm going to do actually is go to technical and we can see that under pattern, they actually have an option to search for stocks that are specifically in a price channel. So we want to find a price channel that is going to the upside. So I'm going to select channel up. And then very quickly I'm going to put in the other criteria here just to find stocks that are in the USA have enough volume for us to actually trade. And just my preference I want to play and stocks that are above $10 per share. So now all of these should be potentially in a price channel that is already up trending in that are going to potentially make really good swing traits in the near future. And you can see that most of these do appear to be up trending just based on a very quick view of their daily charts. So Aegean Sea, for example, looks to be in a very clear and consistent uptrend. It's trading in a nice price channel. So this again would be another one that I would probably look to swing trade once it gets down to that level of trendline support, right around 750 per share. Okay, so hopefully this gives you a quick idea of how to actually find stocks that are in and uptrend in that are potentially trading with enterprise channel. Again, if the screener on fin big.com is and available to you for whatever reason. You can use any different screener or scanners who put in the same or similar criteria to be able to find these momentum stocks for us to trade. Now carrying on with this momentum trading strategy, the next step is to realize that not every trade is going to be a profitable trade. And unfortunately nothing is going to work 100% of the time when it comes to trading or investing. So the other nice thing about this strategy is that the level of trendline support that is going to be below our stock that we're using to actually buy into this for a swing trade can also act as a very clear level of risk. And what I mean by that is we can actually use this trend lines or to cut losses on our trade if this doc happens to start breaking down below that trendline support. So if we take the example diagram at the bottom, let's say that we buy in initially at this trendline support, the stock bounces up, we're able to sell for a profit. We repeat the process over by a trendline support, sell for a profit. And we look to do the exact same thing by buying and trendline support. But this time the stock actually breaks down below that trend line support. That is of course going to be a red flag now that the price is no longer trading within this price channel. So the smart thing to do in this case is to sell our shares and cut losses on this trade in order to simply manage our risk. And if we take this example here, looking at the chart for d, k, and g, we can see there is a very clear price channel that the stock is trading between over the course of a few years. So there are multiple different opportunities here to buy a trendline support and sell a trend line resistance. However, eventually the stock does break down below that trend support. And let's just say, for example, that you look to buy at the trendline support right here, around $60 per share. Now if you were managing risk and you were looking to cut losses, if the stock broke down below trend lines support, you would be able to sell and take a small loss, or maybe just one or $2 per share on I trade. However, if you've got greedy and you were stubborn in avoided cutting your losses and managing your wrist. You can see that there was a pretty big sell-off to the downside afterward. So you would unfortunately be holding onto a much larger loss. This just goes to show how important it is to manage your risks on every single trade. And again, the nice thing about this trendline support in this momentum trading strategy is that it tells you exactly how to manage your risk and exactly when to cut losses on the tray. 7. Stock Market Reversal Indicators: A stock market reversal refers to a stock that is reversing from a downtrend to an uptrend or from an uptrend to a downtrend. In this section, I want to talk about some of the reversal indicators that can help you spot these reversals early on and use them to get into a new trend in order to profit and ride the momentum. The first reversal trend that we're going to talk about is known as volume exhaustion. And analogy that I like to use is to think of the volume as a person running. The person can jog at a slow, steady pace for awhile. But once they start to sprint, inevitably they're going to get exhausted and they're going to need a break. And really the same concept is true in the stock market. A stock can trend in a slow and steady pace for an extended period of time. But once it really starts to spike upward or downward very quickly, in inevitably this dog is going to get exhausted. It's going to run out of supply or demand at those price levels. And it's going to need a break from that move. And there are two sides of volume exhaustion. There are buyer and seller exhaustion. Buyer exhaustion comes when a stock moves up too much, too quickly. The amount of demand that it takes for that stock to spike up the way that it did is going to eventually become unsustainable in it's going to cause the stock to slow down or even cause an entire pool back in the opposite direction. And we can spot these levels of buyer exhaustion by looking for a candle in the volume that is simply much larger than all of the other candles that have gone on throughout the rest of the day or on the entire chart. The diagram at the bottom of the screen is a great example of what this may look like. We can see that as the stock really starts to spike up very quickly, we also get a volume candle at the same time that has been much larger than all of the other candles on the chart. Again, what that represents is that there has been a ton of demand in a ton of buying that is going on within this volume candle. And that level of demand for the stock is going to again become unsustainable. So there is a good chance that the supply is then going to take over, at least temporarily, is going to push the stock price back down. And if we take a look at the chart here for eBay, this is a really great example of buyer exhaustion. We're looking at the daily chart here. So each of these candles is representing an entire day of price action. And just by looking at the chart, you can see that there is a pretty clear level of volume exhaustion here. And it also happens to be at the top of the move before the stock does pull-back. That is again, because volume exhaustion is a reversal indicator. So on this day that there was a big move up in the price of the stock for eBay. At some point within this day, the demand, OK, slowed down and the supply started to take over. And that of course, led to this being the temporary top for eBay's price. And over the following weeks there was a pretty big sell-off in eBay from all the way over $64 per share down to under $52 per share. So really a measure short selling in the stock market. And you're looking for these moves to the downside to profit from the way that you would use this buyer exhaustion is simply as a red flag for any of the investments that you're currently in. If you happen to be in on eBay on this day and you realize that maybe a couple hours into the market open, the volume is already significantly stronger than it is on average for an entire day. That would be assigned that this is the actual level of fire exhaustion. And you would have been able to use that information to sell out of some, if not all, of your position in eBay, logging your profits and protect yourself from the downside rehearsal that is going to come from this reversal point. Now on the other side of the spectrum from fire exhaustion, we of course have what is known as cellular exhaustion. And this is really going to be the exact opposite. It's when a stock moves down too much, too quickly. And that amount of supply that it takes for the stock to go down so quickly is of course, going to eventually become unsustainable, which will often lead to a bounce in the stock price. So seller exhaustion can actually be used for us to find stocks that have gone down lately and that are due for a balanced back to the upside. And we can use that once we're confident that the stock is about to bounce, to actually buy in and profit from that upside reversal. An example we have this is if we take the chart for PayPal, if we just look at the volume candles here on the bottom of the chart, you can see that on this day there was of course, a big volume exhaustion level. On this day, the volume was multiple times stronger than it was on any other day before it. And it also happened to be on the same day that this short-term pullback found bottom before the stock price bounce back up. So again, if you were watching this in real time, of course, hindsight is 2020. But the way that you can find this in, keep an eye on the volume and know what the average volume is for any given stock that you're looking at. Just for this example, let's assume that PayPal is average volume is about 5 million shares per day. And if you were looking at this stock on the day that we see this level of cellular exhaustion. And let's just say that a couple of hours into the market open, the volume is already at 7 million. Well above the average daily volume would still multiple hours left before the market closes. That right away is going to tell you that there is much stronger volume coming in today than there is on any average day. And if you pair that with the fact that PayPal was down significantly for the day and it's actually running into a level of support. All of those things would be a good indicator that the bottom and the price is likely go into bounce from that level. And of course we see the price then bounce from about $175 per share to a few days later being at about $205 per share. And it actually pulls back a bit, but then ends up running all the way up to $309 per share just a few months later in the future. Okay, Now the next reversal indicator that I want to talk about is going to be an indicator that is known as the relative strength index, which is often just referred to as the RSI. The RSI is a momentum indicator that measures the magnitude of recent price changes. Simply put it as a scale from 0 to 100. And anything on the RSI over 70 is considered to be over bought, where anything below 30 is considered to be oversold. When a stock is over bought and the RSI is above 70. The RSI is going to be shown in most cases as red. And that tells us that the price has gone up too much too quickly. Very similar to a level of buyer exhaustion. And you're typically going to see the prize pool back from a level of being severely over bought. The same is true for when a stock is oversold. You can think of it as a level of seller exhaustion. And typically once it becomes very oversold, we will see the price of the stock bounce back up. And if we look at this chart for Twitter, you can see that this a very common pattern that we see in the stock market. From stocks going from overbroad 20 oversold, overbroad 20 oversold, over b2 oversold again and again and again. And you're able to buy and sell at these reversal levels over and over and over, making a profit each time. So for example, Twitter in this case becomes oversold first, right here at about 45 dollars per share. If you were to buy in at this price level, $45 per share. Once Twitter's RSI becomes oversold and tells us that the stock is due for a bounce, you would have ended up with a really nice profit as Twitter stock actually bounced all the way up to about $80 per share in the following few weeks. Fast-forward to about a month in the future. Twitter again becomes oversold for just a moment at about $60 per share. If you were to buy in at that level of being oversold, again, you would have had potential for a really nice return as it then bounces back up into overbroad territory to about $73 per share. And you can see that this process again, is going to repeat over and over and over in many stocks in the market. And we can use this to our advantage to buy and sell at these reversal points. 8. RSI Trading Strategy: All right, so carrying on with the RSI, which we previously talked about in the past section of this course. Before we get into the RSI trading strategy itself, it's important to understand why their strategy is actually so important. And the fact of the matter is that stocks can actually remain in over bought or an oversold levels for an extended period of time. So just because the RSI gets down to 30 or less in the stock becomes oversold, does not necessarily mean that it's going great time to buy that stock, because unfortunately, nothing is going to work a 100 percent of the time in the market. So even though the RSI being overbroad or oversold is a good reversal indicator. It is no exception to that rule. And there are going to be times where the stock continues to trend in that direction, even if this dog is already overbroad or already over sold. So for example, if we take a look at the bottom left side of the screen here, this is looking at the chart for Home Depot. And if you take a look at the chart, you can see that it actually started to get into overbroad territory with the RSI reaching over 70 right here on about March 16th. And the price of the stock at that time was right around $280 per share. Now this is just one of those times where the RSI does end up remaining over bought for a very extended period of time actually for well over a month. And in that one month period, this doc continue to trend higher and higher and higher, going from about $280 per share all the way up to about $330 per share before it finally starts to pull back a little bit. And before the RSI does finally come back below those over bought levels. And really the same thing is true with the right side of the screen here we have the chart for IM VT I NVT actually became oversold on this date here, which looks to be a couple of days after February 1st. And as you can see, the RSI stayed well below 30 for about a month before the stock finally got a good balance to the upside. And within that one month period, the stock went from right around the twenty-five dollars per share mark down to under $12.50. So again, that just goes to show that if somebody were to buy into the stock immediately once it became oversold at twenty-five dollars per share. This is just one of the times when the RSI being used on its own as a reversal indicator would have failed. And if you would not have caught losses, that would have unfortunately ended up being a pretty big loss. So the whole point of the strategy that we're going to talk about here in just a moment is to avoid getting into these situations and to put a little bit more strategy into the RSI. So what we're going to do instead of just blindly buying a stock that is oversold and blindly selling or short selling a stock when it becomes over bot is we're going to wait for what is known as a bullish RSI divergence. Now this may sound a little bit complicated if you're not aware of divergence is in the market. But simply put what this is, is when the stock is actually making a lower low in, at the same time the RSI is making a higher low. And what that's going to look like is something along the lines of what we have here. With this chart for Nike. You can see that the stock price up here is making a lower low. The first row looks to be right around $130 per share. And the following one breaks down briefly below that low. At the same time, the RSI is actually making a high or low. So you can see that it gets down to under 35 during the initial low. But on that second law, the RSI only gets down to just under 40. This is known as a bullish RSI divergence in once you see one of these forming, it's going to be a great indicator to buy the stock. And it is very common to see a bullish reversal to the upside following one of these bullish RSI divergence is, and as we can see from this example, immediately after that forms, the stock price starts to bounce back up from about $130 per share to just a few days later being over $145 per share. So just like that, by spotting this divergence in the market, there would have been potential for an over 10 percent return in just a few days by swing trading this divergence. And just to give you another quick example of what this may look like, this is the chart for Shopify. And you can see actually that there are a few examples here on this chart. We have the first one over here. The price is showing a lower low at the same time that the RSI is showing us a high or low. So again, we want to look for these in real time and we want to look to take advantage of them. Second law is forming. So we would look to buy anywhere in this area down here, right at about $900 per share. And as you can see, there is a bullish move following this divergence, going from about $900 per share to just a few weeks later being over $1250 per share. So another potentially Greg return on this RSI Divergence investment. And if we fast forward a little bit to the future, we get another lower low with the price as well as a higher law with the RSI buying into this bullish RSI Divergence just above $100 per share would have been another great return. As the following days the stock price ended up bouncing back up to that 1250 area. So that's the whole idea behind this RSI trading strategy. It's going to take a lot of the risk out of buying into these oversold stocks. And it's going to make these reversal points with the RSI a lot more accurate than it would be by just looking at overbroad and oversold levels. Now as far as actually finding these types of setups, again, you're going to need some kind of screener or some kind of scanner. I'm going to first go over to the thinkorswim platform with TD Ameritrade. And I'm just gonna show you first and foremost how to actually find stocks that are reaching oversold levels in the market. So first what I wanna do is make sure that among the scan tab, and I'm gonna go ahead and create a new scan here. And we'll go ahead and title. There's something like oversold stocks. And click on save. And what we're gonna do is pull that scanner up now. And we're just gonna go ahead and add some criteria that we want to see when we're looking for these oversold stocks. So first and foremost, I'm gonna go ahead and put the last price as being anywhere from $10 up to $100. And this is entirely just preference. If you prefer higher or lower price stocks, you can go ahead and make some adjustments to this. But I personally prefer to swing trade stocks within this price range. After that, I'm going to go ahead and remove these two pieces of criteria that are there by default. And I'm gonna go to Add Filter. I'm going to go to study in over on study. I'm gonna go down to volume studies and select average volume. I just want to see that the average monthly volume of about 30 days is greater than 500000 shares. And that's just to make sure that the stocks that are popping up on the scanner have enough volume and have enough liquidity for us to easily get in and out of them without having any problems with the volume itself. And the next thing that's actually going to find oversold stocks is to go to Add Filter, click on study. And this time we're going to go down to custom. We're going to go ahead and click on edit the default. And instead of the Adx crossover, what we wanna do is select study. And we're going to search for the RSI. After that, we want to see that the RSI is going to be less than or equal to 30. Because again, that's when the RSI is going to be considered oversold. And we're going to change this from one to five bar. So this is just looking over the past five bars or five candlesticks for any stocks that have had an RSI of 30 or less. Then we're gonna go ahead and click on save. And okay. And from there we can go ahead and click on Scan and all of the stocks that are meeting that criteria are then going to go ahead and pop up on the scanner. So from there now that we have a list of stocks that are currently or recently have been oversold on the daily RSI. What I would do is simply go through some of the charts, do some very brief technical analysis, look at the RSI and see if I can find any bullish RSI divergences that are forming on these charts. Once you start to get the hang of spotting these divergences on the charge, that's going to be much easier and you're going to be able to breeze right through this list and narrow it down to just a few potential swing traits that are all meeting the criteria of the RSI trading strategy. Now very quickly, if you're not using thinkorswim this platform here from TD Ameritrade. Again, you should be able to use some kind of other free screener or scanner that is built into your trading software to do something very similar and find stocks that are oversold. But I'm just going to show you very quickly how you can also do this on thin biz.com, which again is a free screener that we can use to find a bunch of stocks that are meeting our specific criteria. So first what you wanna do is click on screener up at the top of fin because we're going to select all. So we have all of the different criteria that we can use to filter. And I'm going to go ahead and select on price being over $10 per share. I want the average volume to be at least 500000 shares. And I want the RSI to be oversold at 30 or less. So as you can see, just like that, we were able to narrow the market down to just 12 potential stocks. All of these are currently oversold. So all of these again, are potentially going to be swing trades in the near future, especially if we see them start to form some kind of support. Or especially if we see them start to form a bullish RSI Divergence. 9. Swing Trading Chart Patterns: All right, So in this section of the course, I wanted to go over a few of the more common chart patterns that we see as traders. That in my personal opinion, you should always kind of keep an eye out for because they can help you open new positions. And they can even help you manage the positions that you're already a. And the first of those patterns is going to be known as the bowl flat pattern. And what the Bull Flag pattern is, is a continuation pattern that happens after a bullish move to the upside that indicates that the stock is going to continue higher after it breaks out of the pattern. So in other words, the Bull Flag patterning is kind of a level of consolidation after a stock spikes up and kind of trade sideways for a while before it continues to. And because of that, we can use this pattern to buy into stocks that already have upward momentum without chasing them all the way at the highest. So it's kind of a way for us to buy a pullback or a dip and a stalk. And for the most part it's going to look something along the lines of the diagram that we see at the bottom of the screen. Again, we start off with a big move to the upside. Following that the price action is going to kind of give more and more narrow over time, kind of starting to form a bit of a triangle pattern. And eventually if it is a true Bull Flag, it's going to break out above that trend line resistance that forms within the Bull Flag pattern. And the stock is going to continue to the upside. In for a real life example of this, we have the chart for Facebook and we're looking at the daily chart. So this is looking over the period of about a year. I'm a little bit over a year actually. And you can see that we start off initially with our bowl move to the upside. And just like the diagram on the previous slide, you can see that there is the consolidation period, which is actually the flag itself in the bowl flat pattern. And this is where the price kind of traits sideways for a period of time before the stock actually breaks out above that trend line resistance and follows through with its continuation to the upside. So this is a really long-term example because it is again on the daily chart. And you can see that the consolidation period in the flag itself actually lasts from about September of 2020 all the way until nearly April of 2021. So I just wanted to point that out because sometimes these are going to pan out over the course of a couple of weeks. And other times they may take months or even over a year for them to actually completely finish the Bull Flag break out and continue to the upside. So when you're dealing with a bull flag, really there are two ways that you can kind of take advantage of these and look to buy into the bowl flight pattern to profit from that upward momentum that's going to follow when the stock is able to break out. And the first is going to be at the bowl flags trend lines support. So when you look at a bull flag, it's really made up of a level of trendline support. Trend line resistance to trendline support being at the bottom of the bowl flag. And that's going to be a potential level that we can buy the stock, anticipating that there is going to be a breakout above that Bull Flag resistance. And the other way is going to be to buy at the bowl flags actual breakout above resistance. And the reason that I generally actually prefer the second method is because the bull flag is not actually validated or confirmed until that breakout happens. So for example, if we were going back to the Facebook example, this entire consolidation period here when the bull flag is actually forming. Of course, in hindsight, we can see that this is a bull flag and there is a breakout that follows. But during this period when the price action is actually happening, we don't necessarily know that the stock is going to be able to break out above that trend line resistance yet. So there's really nothing to say with 100 percent certainty that this is actually going to be a bull flag. That's why buying at the trendline support can sometimes be thought of as being a little bit riskier than actually waiting for the confirmed breakout. But at the end of the day, this is going to be up to your personal preference and whichever way you prefer to trade them. So moving on from the bull flag, that next pattern that I want to talk about that can be very useful for swing trading, day trading and even long-term investing is going to be the Head and Shoulders pattern. Now what the Head and Shoulders pattern is, a bearish reversal pattern that can be used to sell positions in avoid holding a stock during a temporary pullback. And the reason that I wanted to include this in is because a lot of times you'll be in a position and you may not necessarily know, winds a good time to sell and when's a good time to lock in your profits. You want to, of course, avoid from getting greedy and you definitely don't want to watch a winning trade turn into a losing trade. So by spotting patterns like this one, it's going to be a good indicator to sell in lacunar profits before the stock does pull back. And the reason that it's called the Head and Shoulders pattern is because he kind of resembles a person with the left shoulder, the head in the middle, which is higher than the two shoulders. And the right shoulder, of course on the right side, which is going to be about parallel to the left shoulder. So for example, if we take the chart for Snapchat, stock symbol S NAP, you can see we have a bit of a head and shoulders pattern here, starting off with a move to the upside. And because of course the Head and Shoulders pattern is a bearish reversal sign. After the pattern is confirmed, the stock ends up going significantly lower. And if you look closely up here, you can see that we have our left shorter. We have our head and then we have our right shorter, which he's actually perfectly parallel to the left shoulder. And in-between those two, the lowest point is going to actually act as a bit of a level of support. So once the stock is able to break down below that support level that forms between the two shoulders. That's when the Head and Shoulders pattern is going to be confirmed and that's when the stock is most likely going to break down and have a pullback in the near future. So the way that we take advantage of the head and shoulders pattern, if you are in a position and you're looking for that opportunity to sell in lock in profits, which you would wanna do is actually use the right shoulder of the pattern Azure indicator to sell. And that's because this is a very easy level to spot because you can what looks to be the left shorter as a clear level of resistance. So you would go ahead and draw this level of resistance. And as this dog bounces up into that resistance level, unless the stock is able to have a very clear and easy breakthrough above that resistance, then you're going to know that this is most likely going to be the Head and Shoulders pattern and the stock is probably going to pull back in the near future. So you can look to sell in that area and avoid having to hold through that pullback. Now one other very important thing that I wanted to mention about charred patterns is that your charged timeframe is going to play a huge role in how your chart patterns actually play out. So what I mean by that is, for example, a bool flag on the one-hour chart may only take a week or so to actually break out and continue higher. Whereas a bull flag on the daily chart, something longer term, is going to most likely take longer to break out. So it may take anywhere from a few weeks to a few months or even longer. So when it comes to swing trading and people looking for positions that they're going to hold anywhere from a few weeks to a few months. The most common time frames on their charts for that type of trading is going to be the one hour, that four hour in even the daily chart. Any pattern or strategy that's used on these timeframes are most likely going to take at least a week for them to complete the play out, which of course is ideal for swing trading. And when you compare that to something like the one-minute chart, here we're looking at the one-minute chart for an OVN. And you can see that there is a pretty nice Head and Shoulders pattern here on this one minute chart. We have the left shoulder, we have the head, and we have the right shoulder. And although this is a pattern that you can use for day trading, swing trading, and long-term investing. The type of trading is again going to depend on the timeframe of the chart. So since this is a very short term timeframe, the one-minute chart, these Head and Shoulders pattern from start to finish really happens within a period of about 30 minutes from about 1015 AM to about 10, 45 AM. So this just goes to show that just because you see one of the chart patterns that we just talked about on a chart doesn't necessarily mean it's going to make swing trade because it's going to again, depend on the time frame of that chart. And it's also going to depend on your goals and your preferences in your own personal trading. 10. Price Targets: Okay, so now that we've talked about a few different trading strategies and we've gone over some different chart patterns that you can use to actually find some good swing trade opportunities. I wanted to kind of take a step back and talk a little bit about price targets, which are actually a very important part of any trading strategy. And it's really going to be a part of your trade plan that you should have before you actually enter the trade. So first and foremost, what a price target, AES, is going to be a predefined level that you're going to exit out of your position at a profit. And as I just mentioned, this price target a is going to be part of your trade plan. That's usually going to be based on some sort of technical analysis. So look, we've talked about already in the previous sections. Obviously if there is a very clear level of resistance on a chart and you just bought into that stock, you know that there's a good chance that the stock is going to fail to break out above that resistance line. So one way that many traders will define their price target is to look for a level of resistance and set their price target just below it. This way they're able to login profits at the highs in case this dog does build to break out above resistance in by having this price target in mind, it's going to kind of keep your emotions in control. And a lot of times it's going to prevent from greed taking over while trading. So just for a very quick example of how you can actually find a price target. If we take this example here for AAL, this is the daily chart and as you can see, there is a very nice uptrend forming. You can see from last year in October all the way up until now, which is currently in about the middle of June, there has been a very strong, inconsistent uptrend forming on this daily chart. Higher highs and higher lows consistently. And this dog is holding this level of trend lines support. So let's just say, for example, that you bought into this stock at the trendline support right here when it pulled back at about $21 per share. Now again, it can be very beneficial to, before even getting into the trade, have an idea of where you're going to lock in your profits. Trade does move in your favor. So just by looking to the left side of the chart and looking for any past highs or past levels of resistance, that's going to give you a really good baseline as to where the stock is likely going to reverse back down. So in other words, that's going to give you a really good baseline as to where he should probably lock in some, if not all of your profits on that swing trading. So in this case, if we bought out about $21 per share, we can look back a few months behind. And there was a peak up here at about $26 per share, which is naturally going to be Tom, a slight level of resistance since that was the peak and I was the high before the stock started to pull back. So what you would do is you would say your price target and you would maybe set in order to sell some of your shares just below that level of resistance in case again, it fails to break out and ends up reversing back down to the downside. And by doing this in this example, this would've been a really great time to lock in your profits just below $26 per share. Because as we can see that 26 dollar area, it end up holding as a level of resistance. And the stock started to pull back down to that trendline support after failing to break out. So to kind of just reiterate what I've already mentioned about price targets and why they are so necessary and essential when trading. Simply bug what they do is kinda prevent you from getting greedy in a trade. Although none of us are necessarily trying to be greedy. At the end of the day, we're all in the stock market for the same reason. We want to make as much money as we possibly can. So with that mindset, a lot of times comes greed, even when we don't necessarily think we're being greedy. So anytime that you're in a position and the chart in the praise action is starting to look a little bit shaky. And maybe there's been a few different signals on the chart telling you that now is a good time to sell and lock in your profits. But you continue to hold, hoping that you're going to make more and more and more. That is of course, being greedy. And we do want to avoid that at all costs. Now just for example here, if we take a look at this trading diagram, well, let's just say that we bought in while the stock was up trending. And after we bought in the stock continue to trend up higher and higher and higher without any major pullbacks and without any major signals to sell. If you're still holding all the way up here, even if you're up, you know, 1020, even 30%. I wouldn't necessarily say that that's being greedy just because the stock has not necessarily given you any signals at that point to actually sell, unlocking your profits. So in other words, there's nothing wrong with letting your winners run. If you read about a trade and the stock is moving in your direction and everything is going as planned, then it's actually a really great idea to make the most out of your winning trades and let them continue to run and make you more money. However, of course, great again is going to take over when you're in a position and you're already profitable on that position. But there's some signals, maybe there's a chart pattern like we see here for this example. You can see that this is a bit of a head and shoulders pattern. So if we were seeing that in real time, that would of course be a red flag because we know the Head and Shoulders pattern is a bearish reversal indicator. So if you were still holding your position after that pattern completely formed in the stock broke down. That's when greed is going to start taking over. And that's when hopefully you can kind of realize what you're doing in lock in your profits on that trade. Before that winning trade turns into a losing trade. Now with all of that being said, what I recommend doing when it comes to price targets is to exit out at least 50 percent. Once your price target is reached. By doing this, you're going to lock in some of your profits, which is going to naturally of course, reduce your overall risk in your overall exposure in the market. But additionally, it's also going to give you the ability to make the most out of your winning trades. So if you sell half of your shares and you reassess the chart, and everything still looks to be going as planned. There's no clear signals to sell. Then again, you can keep holding onto the other 50 percent of your shares and hopefully the stock will continue in your favor. You can sell them at a much higher price. But the nice thing about doing this is that if it doesn't happen to go higher and the stock pulls all the way back down to where you enter it in the first place. You're still going to be up and profitable on the trade because you locked in 50% of your profit once the price of the stock reached your price target. Now one other thing to keep in mind is that a trader with ambitious price targets should expect more frequent losses than a trader with conservative price targets. So if that happens to be you and you're looking for more ambitious price targets and more ambitious profits. It's going to be very essential for you to manage your risks and keep those losses small. So that way your profits can still outweigh your losses, even if you have a larger amount of losses than you do profits. So in the next section of this course, we're going to talk about how you can actually manage your risk. And I'm going to be giving you some tips on keeping your loss is small. 11. Risk Management & Cutting Losses: Now in the previous section of the course, when we talked about profit targets and we talked about locking in profits on a trade. I briefly mentioned that your profit targets should be part of your trade plan, which you should actually have before you enter the trade in the first place. And aside from your profit target, the other half of that trade plan is going to be made up of your risk level, which is going to help you manage your risk and keep your losses in the market small. At the end of the day, risk management is the most crucial part of any type of trading or investing. Because unfortunately, if you think about it, it really only takes one bad trade to wipe out days, weeks, even months of profits if you're not properly managing your risk. So with that being said, there's going to be a few different ways. Yourself manager risk and keep your losses in the market small. The first way is going to be a little bit more manual and hands-on. And this is going to be to set price alerts so that your brokerage is going to notify you when a stock reaches a certain price. With most brokerages, you're going to be able to set price alerts. So if you're using TD Ameritrade or E-Trade Fidelity Interactive Brokers and so on and so forth. Most of those are going to allow you to set price alerts. And very quickly, if I jump over here to the thinkorswim platform with TD Ameritrade, just to show you, for example, how this is going to look. If we take the chart here for Bank of America. Currently Bank of America is trading at $41.54. Let's just say, for example, that I wanted to set a price alert for Bank of America so that I'm going to be notified if the stock falls down to $41 per share. The way that I can do that in this platform is going to be to right-click on the chart. And down here click on Create alert. I want to be notified when the price of Bank of America is at or below $41 per share. And I'm going to go ahead and create that alert. And as you can see, a line pops up here on my chart at $41 per share. So now because I also have the thinkers went mobile app on my phone, if I'm not on my desktop computer, and the price of Bank of America falls to $41 per share. It's going to actually notify me on my phone that Bank of America has fallen $241 per share. And the reason that this is so helpful when it comes to trading and managing risk is because let's just say, for example, that I decided to buy Bank of America earlier on in the day today at $41.50 per share. And I only wanted to risk $0.50 per share. So if the stock falls down to $41, even I'm going to want to at that time manage my risk and cut my losses on that trait. So if I go ahead and set this exact same price alert to notify me when Bank of America is at $41 per share or lower, I can immediately get on my phone and get on their thinkorswim app. As soon as I get that price alert notification, and I can go ahead and sell out of my position and cut my losses on the trait. Now the other way that you can actually manage your risk is going to be a little bit more of an automated process. And this is going to be with what are known as stop-loss orders. Now a stop-loss can be set below the stock's price to automatically exit out of your position for you when your risk level is reached. So when you place a stop loss order, it's going to ask you for a stock price. And that stock price is going to be your risk level. And when that risk level is reached by the stock, that order is automatically going to turn into an order to sell out of your position for you at the market and immediately get you out of the position and cut your losses on the trait. Now there are a few downsides to setting stop-loss orders, as opposed to setting price alerts and just manually exiting out of you, the Russians. And the first of those downsides is that stop-loss orders are not going to be effective in extended hours trading. So if the price of the stock that your aunt falls down and reaches your stop-loss order during pre market or an after hours trading. It's not going to be executed until the market opens. So if you're not aware of this and you're not careful, this can cause you to take larger losses, then you would have expected if that stock happens to continue going down before the market actually opens for the day. Now the other downside to using a stop-loss order is that if you're trading stocks that don't have a ton of volume and if there's large spreads between the bid and the ask, since your stop loss order is automatically going to turn into a market order to sell once your stock price is reached. A lot of times it can lead you to getting a very bad fill in selling at a lower price than you would have liked to. Especially again, if you are trading stocks that don't have a ton of volume, and maybe they're only trading a couple of 100 thousand shares on a daily basis. Okay, now with all of that being said, I wanted to show this example here for Facebook's chart. And you can see that there is a bit of a level of support down here at about 330 to 80. As the stock opens for the day, that forms as a low before it spikes up and after it pulls back down, that same level holds as a bistable level of support. Now because of that, a lot of traders are going to see that this is a level of support right here in this area, That's where a lot of traders are going to be buying, expecting the stock to bounce back up from that support level. However, another thing that many traders do that you want to avoid is set their stop-loss order just below that level of support. So if this support level was at $332.80 sounds on the dot, a lot of traders, believe it or not, would set their stop loss order at 332 dollars seventy nine cents, 332 dollars seventy eight cents, and so on and so forth. Well, you have to understand that levels of support and resistance are not always going to be perfect to the penny. So if you set a stop loss order so close below a level of support, what's going to happen a lot of times is exactly what we see here in this. Let's talk very briefly breaks down below that support. Many traders in that case got stopped out and took a small loss on the trade. But aside from taking that unnecessary loss, they also missed out on a big run that happened in Facebook just after there was that false break down below support. Okay, so the very obvious solution to this problem is to give your stop-loss some wiggle room below any level of support that you're using. This can be, of course, a clear level of horizontal sport. It can be a level of trend lines support. Maybe you're using some kind of indicator like the VSCO app, which often acts as a level of support and resistance as well. Whatever it may be, you want to give it some kind of wiggle room so that you're not going to get stopped out in these exact same patients and you're not going to miss out on these big runs. And in my opinion, you should allow anywhere from three to 5% below a level of support before your stop loss is actually triggered in the amount of wiggle room that you actually give. It is really going to be dependent on that individual stock in that individual's setup. So for example, if we take these two charts when we compare the two on the left side of the screen over here we have the stock for GameStop, and on the right side we have the stock for Bank of America. If you look closely at the chart, you can see that GameStop on any given day really trades at least within a 10 percent range. Many days we see that its range is actually 20 percent, 30 percent, even 50% or more. When we compare that to Bank of America, bank of America trades within a very small range on any given day, usually within about 1% or less. Now because of that, it's considered to be much less volatile. So you're going to need much less wiggle room below a level of support than you would with a stalk like GameStop. Okay, So to kinda summarize, if you're going to be using a stop loss, make sure to kinda look at the charts history, and make sure to understand what kind of stock you're trading. If it happens to be a highly volatile stock like GameStop, you want to probably give yourself at least three to 5% wiggle room below a level of support to avoid yourself from getting stopped out in any false breakdowns. It's a much less volatile stock like Bank of America. You can say your stop loss is a little bit closer to that level of support without having to worry so much about there being a false breakdown. Okay, now with all that being said, one thing that you may be wondering is if you're going to be setting your stop-loss so much further now below a level of support. Doesn't that just mean that you're going to be losing more money if the trade goes against you. And the answer to that, of course, should be no. What do you want to do to avoid your losses from getting larger is to simply adjust your position size based on your max risk and based on your distance from your stop loss. So even though you may be risking a larger percentage, you should not be risking any more money than you would on any given trait. 12. Scanning For Trades: Now in this section of the course, I wanted to kind of reiterate some of the things that we already talked about throughout the course when it comes to scanning and screening for trades, as well as give a few other additional pointers that I really recommend you follow when it comes to scanning and screening for traits. Now believe it or not, scanning in the market is going to be a crucial part of your swing trading journey. Because at the end of the day, finding the right stocks to swing trade at the right time is going to be half of the battle. So with these scanners, any screeners are going to do is help you do just that. So we're going to talk about some of the criteria that you want to put into your scanner in order to help you find the best swing trading setups. Now first and foremost, like I've already mentioned a few times, there are countless different options for scanners or screeners. If you open up a brokerage account and use that brokerages trading platform, most of the time they are going to have some kind of scanner or some kind of screener that's built into that platform for completely free. The thinkorswim platform with TD Ameritrade, E-Trade pro platform, the trader workstation platform, which is from interactive brokers. Interactive brokers for those of you who don't know, actually accept traders from all around the world. So if you're not based in the US, you may want to check out Interactive Brokers than there is, of course, Finn biz.com, which is a free website with a free screener. Now, there's also paid options such as trade ideas, equity feed and so on and so forth. Now when it comes to actually putting in criteria and scanning the market for stocks meeting your specific criteria, regardless of which trading strategy you are using and exactly which type of stock you're looking for in the market. There's going to be general things that you're going to want to put into that scanner to make sure that you're really not wasting any time with that scan. And to make sure that some of those low-volume, highly manipulated stocks are not going to pop up on your scanner. So first and foremost with that being said, you're always going to want to see that the average volume when scanning is going to be a bare minimum of 100 thousand shares. The average volume simply takes the average amount of volume or the average amount of shares traded on a given day over the past 30 days. And this is very important because any stocks that are trading less than a 100 thousand shares on an average day are going to be considered pretty illiquid stocks. And when a stock is illiquid, because there does have to be someone on the other side of your trade. Meaning if you're buying or has to be somewhat to sell you those shares. And if you're selling, there has to be someone to buy those shares from you. Stocks trading less than a 100 thousand shares on a given day can make that very difficult to do since there's probably not going to be buyers and sellers lined up at every penny. In fact, in my opinion, for the most part, more volume in general, there's always going to be better. So if you want to be a little bit more specific and narrow this down even further, you can change that from a minimum of 100 thousand shares to a minimum of 500 thousand shares, or even a minimum of 1 million shares traded on an average day. The second thing that you're going to want to see is a specific price point. Now for me personally, I like to swing trade stocks or above $10 per share. This is completely preference though if you'd like to trade smaller price stocks or if you want to trade maybe only stocks over $15 per share, that's going to be up to you. But personally, the reason that I choose $10 or higher is because for the most part, stocks that are under $10 per share are going to be a little bit higher risk in they're going to be a little bit more volatile. The third piece of criteria is going to be the country. Now being that I'm personally based in the United States and I have a brokerage account with a United States based brokerage. When I do my scanning and I do my screening, I like to look for stocks that are just based in the United States. So that way the scanner is only going to show me stocks that are listed in my country. And I don't have to worry about whether or not my broker is actually going to allow me to trade that stock. And I'm not going to have to worry about any additional fees being added onto that trait. And last but not least, we're going to look for a Beta. Now when you're scanning or screening the market for trade, what beta actually means is how much volatility that stock sees in relation to the general market. So a beta of one means that the stock is moving perfectly in relation to the market as far as volatility goes. Whereas a Beta of maybe two means that the stock is going to be about two times as volatile as the general market. So because I personally like to look for stocks that have a little bit more volatility. And they're going to be just a little bit higher risk and higher reward than investing in the general market. I personally like to put a Beta of between one to 1.5. Again, this is really preference as well. If you want to look for stocks with more volatility, feel free to boost that up to a Beta of two or even higher. And of course, if you want to look for even more stable stocks, you can always scan the market for stocks with a Beta of less than one. So just to kinda show you what scanning the market is going to look like here on Canvas.com. I've gone ahead and open up the screener in the top-left corner. Again, this is completely free to use on fundus. And you can see right off the bat without putting any criteria and we have 8,215 total stocks. Now if we go ahead and first put in the average volume of at least 100000 shares. Then we're going to change the price to at least $10 per share. And we're going to change the country to stocks in the United States only. And last but not least, we're going to look for stocks that have a Beta of between one in 1.5. So just by putting in those four pieces of criteria, we've narrowed the market down from over 8 thousand stocks to just 650. Now of course 650 stocks is still quite a few to go through and look for any potential swing. But that's where the other sections of this course are going to come in handy. So we already talked about briefly in the past sections, how you can find stocks for those specific strategies that we went over. Now if you pair that information with these four pieces of criteria that we've talked about in this section, it's going to narrow the market down to probably just a few really good swing trade set-ups that are not only going to be meeting the specific criteria for that swing trading strategy, but they're also going to be meeting your actual personal trading preferences, being that their price within your given range. They have the amount of volatility that you prefer, and they're trading enough volume for you to actually get in and out of that trade without running into any problems with liquidity. 13. Diversifying Your Portfolio: Alright, now to kind of start wrapping up the course, I want to talk a little bit about diversifying your portfolio. Diversifying is a big part of any type of successful investing. And that of course goes for swing trading as well. And really what it does is spreads out your wrist, which is going to enhance, minimize your risk and hopefully help you maximize your returns in the market as well. So to kind of visualize what this is going to look like. If we take the left side chart down here. If you were to invest your entire amount of capital into one single stock, and this was the chart for that stock. You have to keep in mind that that also would be the chart for your overall portfolio. Meaning that during these big pullback periods, that's going to also be a big pullback in your overall portfolio. And that's going to cause you to have to hold onto some big draw downs and some big losses in the market. Now on the other hand, if you were in a diversified portfolio and let's just say that this single stock is also a part of this diversified portfolio. You can see that along the way there are still pullbacks read around the same time that that single stock is pulling back. But those pullbacks are going to be much smaller because you're going to have other stocks in that portfolio that are going to be going up at the same time that this stock is going down. And at the end of the day, what they're going to do is kind of even each other out and minimize those drawdowns that you see in your portfolio. So one big in one very common mistake that a lot of new traders and investors make when it comes to diversifying their portfolio is they think that just because they're in different stocks means that their portfolio is going to be diversified. And yes, of course, being indifferent stocks is a part of diversification. What you want to make sure that those stocks in your portfolio are also going to be in different sectors of the market. This is because sectors tend to move together. And some very common sectors that you're going to see when you're trading or investing are going to be the technology sector. So these are going to be stocks and companies like Apple, Facebook, Google, Netflix, and so on and so forth. There's also the energy sector, there's the healthcare sector, There's the financial in bank sector. And of course there's going to be the retail sector as well. So because of this, you may think that you're being very diversified in your investing by having some shares of Apple, having some shares of Facebook, having some shares, google, having some shares of Microsoft. But if that makes up your entire portfolio, all four of those stocks fall within the technology sector of the market. So because these sectors tend to move together, if Apple was having a big pull back, the other three stocks in your portfolio are most likely going to be pulling back as well. And that's kinda going to take away a lot of the benefits of being in a diversified portfolio. So just for example, if we take these four charts here, these all represent stocks in the travel sector of the market. We have three airlines, Delta Airlines, United Airlines, American Airlines, and then we have the Carnival Cruise Line. You can really see by looking at these charts how similar the charts are and how they tend to pull back at the same time and they tend to spike up at the same time. So again, this is really goes to show that if you're in a diversified portfolio, you want to be in different sectors of the market because you're not being as diversified as you may think, just by being in multiple different stocks. If those docs happen to be in the same sector of the market.