Introduction to a Simple Swing Trading Strategy
I want to declare to my readers that I have made Rs. 1,65,638 in the last 2 months just by trading one stock, ABAN. But how??? As usual, all my rules are simple. Also, as simple as a novice can trade it like a pro. It’s a buy-only simple swing trading strategy. Buy when the price closes above 5 Days Exponential Moving Average (DEMA) after a continuous and prolonged fall and sell/exit when the price closes below 5 DEMA. That’s all, and My God!!! You are in profit.
Let me illustrate my trades (I always trade 1 lac for each stock):
| Sr No | Date | Trade | Remarks |
| 1 | 13/03/2009 | Buy @ 256 | |
| 2 | 21/04/2009 | Sell @ 470 | Profit of Rs. 83460 |
| 3 | 24/04/2009 | Buy @ 489 | |
| 4 | 27/04/2009 | Sell @ 426 | Loss of Rs. 12852 |
| 5 | 09/05/2009 | Buy @ 452 | |
| 6 | 27/05/2009 | Sell @ 882 | Profit of 95030 |
ABAN is a Hold till now as it’s above 5 DEMA, sell shown for illustration.
Accessible Data for Strategy Execution
So, where to get all this data, which stock is closing above its 5 DEMA? Again simple. all major stock’s end-of-the-day (EOD) charts are available on this site in the EOD Charts section. Your job is again very easy. Just pick your favourite stock and go long in it.
Implementing Risk Management for the Simple Swing Trading Strategy
Keep a standard 5% Stop Loss for all swing trading activities. Hopefully, that will save a trader from big losses. And the stock market is also all about running your profits and minimising your losing trades.
I will suggest looking for a continuous downtrend and then a close above 5 DEMA. Actually, posting all backtesting is definitely beyond the capacity of this post. I can say it is a simple idea, for those who want to keep life simple and stick to a particular system. Of course, this system has some limitations as any EMA-based system does not work in a sideways market, but definitely profit percentage will definitely outperform the losses and will bring u decent money.
Conclusion: Empowering Novice Traders
This strategy will not work in prolonged sideways markets. but, see first I told you to enter only after a prolonged down move. and if you wish you can consult some momentum indicators. but discussing that is beyond the scope of this post. I need your comments to take this discussion to further heights. Cheers!!