|
| Swing
Trading Using Technical Analysis |
| By
John Netto of One Shot - One Kill Trading LLC* |
About
My Trading Style
I day and swing trade using a variety of technical analysis
techniques. My trading focuses on the NASDAQ 100, S&P
500, Eurex and ten-year notes.
I
prefer using E-Mini index futures to execute my trading strategies
due to their high liquidity and low commissions. However,
you may also use exchange-traded funds (ETFs), such as the
QQQ or SPY, or index-tracking mutual funds as index trading
vehicles. Whether you trade the indices directly or individual
stocks, most of them correlate well with one index or another.
My Primary Strategy
My primary trading strategy is a simple one. I look to buy
weakness in rising markets and sell strength in falling markets.
Once in a trade, I take profits at predetermined price points.
Implementing
the Strategy
I use several tools and techniques to help me execute this
basic strategy. Most importantly, I trade based on price action.
I often use Fibonacci and Gann price points and have found
that they consistently provide high probability trade entry
and exit points. This is especially true if a confluence of
indicators appears in the same area on a chart.
To
determine trend, I apply 5-, 15-, and 39-period moving averages
to 3-minute, 1-minute, hourly and daily price charts. I look
for volume to confirm price movements and increase the probability
of a good trade. I also look for common chart patterns and
use trendlines, channels and market sentiment to supplement
my technical analysis.
To
add depth to the index's price chart, I look at individual
sectors and the major component stocks that make up the indices.
I also employ correlation analysis and look for bonds and
currencies to confirm index price movements.
Swing
trading can be extremely profitable because it captures moves
that are generally too short in duration for institutional
traders to capitalize on. These "crumbs" that the
institutions leave behind can add up to millions! Your job
as a swing trader is to grab your piece of the action. Sometimes
being small and nimble is the way to go!
Swing
trading generally requires less time in front of the computer
than day trading and can be done even if you work full time
at another job during the day.
Aside
from being an active trader and trainer, John Netto is President
of One Shot - One Kill Trading LLC and Chief Investment Strategist
and President of Semper Fidelis Capital Management, moving millions
of dollars in and out of the market everyday. John spent years
developing a very successful, yet simple-to-use trading method,
which is the subject of his book, One Shot - One Kill Trading
and is an expert in the use of technical analysis for trading
stocks, futures, options and currencies.
*Reprinted
(and modified) with permission from John Netto
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