TechniTrader Stock Market "Swing Trading Exits"

Resistance and Support Effect Stock Runs 

Before you ever enter a Swing Trade whether it is buying or selling short, you must evaluate the Market Condition and the strength of the action. Velocity moves are ideal for Swing Trading in an Uptrending Market.
 
As a Swing Trader you want price to move rapidly with sufficient room before a retracement will occur. Swing Trades will retrace at moderate to strong resistance, and will bounce at moderate to strong support.

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The only time a Swing Trade will move beyond moderate support, is when the Price action has plenty of Velocity. How to anticipate if Price will retrace, bounce, or move beyond resistance or support is by using price action to volume action analysis. 

The chart example below shows a Swing Trade candlestick pattern.

stock chart example Momentum Run - technitrader

As Price rises in this Momentum Run then Volume Bars should run up also, so that they are rising above the previous day’s Volume Bar as Price moves up.

A Swing Trader in this stock would want to check intraday charts, to find a tight intraday stop loss. This would protect profits on these long white candlestick days, with increasing Volume that signals there is Velocity in the Price action. As a stock nears resistance, Volume plays an ever increasingly important role. To overcome strong resistance, Volume needs to continue to increase.

A good Swing Trading Exit strategy would be to keep tightening up stops as Price moves up, if Volume is not dropping back and the market is still moving up overall.

As long as Volume is increasing, tightening stops is a good exit strategy for Swing Traders. If a Resting Day Candlestick forms, then continuing to hold with a tight stop can reap more profits. If Volume begins to taper off, then a Sell At Market SAM order is something to consider.

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Summary

Each Swing Trade is different as each stock moves differently depending on the Market Participant Groups trading that stock. If the market is trending strongly after a period of Platform building, then stocks can blast through weak to moderate resistance on a momentum move. If the market is weak or uncertain, then Swing Trades will stall or retrace at moderate resistance.

Remember that the goal of Swing Trading is fast in and out, and not holding through any kind of retracement at all. If the stock is not moving as expected, the rule is not to hold but to exit the Swing Trade. Resting Days are fine to hold through, but retracements are not.

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Trade Wisely,

Martha Stokes CMT
TechniTrader technical analysis using a TC2000 chart, courtesy of Worden Bros.

Chartered Market Technician
Instructor & Developer of TechniTrader Stock and Option Courses
TechniTrader DVDS with every course.

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