My Swing Trading Strategy

Options Strategy:

Long Call: To the left is a small breakdown of the characteristics of the long call option. Risk is capped to the premium paid for the contract. Premium equals the amount of money required to purchase the contract.

Example: If I purchased an $AAPL call for $5.30, it would mean I paid $530 for the call option ($5.30 x 100 shares, each option contract gives the buyer the right to 100 shares of the underlying stock). The profit is uncapped because the stock price theoretically could keep rising. Volatility is high due to the nature of options contracts. Profitability percent is lower because you need to be right directionally (where the stock goes, up or down). And the cost is high, premium can be expensive sometimes.

Contracts wise, I play the weekly candle like it would be the 15 min candle. I require a minimum of 3-12 months out expiration. If I’m playing the weekly and only buying 1 month out, it’s like your playing 4DTE (days until expiration) contracts. This allows me to stomach 2-3 weeks of consolidation (if it happens), and still be able to catch the big move. I target ATM (at the money) strikes because they hold more intrinsic value than OTM (out of the money) strikes. Remeber, this is my options trading strategy, not my swing trading strategy.

Check Out the Swing Trading Ideas I post Weekly:

S/R Flips:

In trading, the concept of “support” refers to a price level at which a financial instrument, such as a stock, commodity, or currency, tends to stop falling and may even experience a reversal and start moving higher. It is a key technical analysis term used by traders to make informed decisions about buying or selling assets. The same goes for resistance.

An S/R flip occurs when a previous price floor or ceiling is broken through. Think about a 3-story building. If we are on the second floor of the building, we have a floor and ceiling above us. When price hits and breaks through the ceiling, that same ceiling, now becomes a floor. The same goes for trading. Let’s say price cannot get through the $100, it is acting like a price ceiling. now, let’s say price gets to $105. The previous ceiling of $100, now becomes a floor at $100.

Rule: The 1st retest of previous resistance or support is always the most powerful and can be relied upon the most.

Market Structure:

Market structure is strongly correlated with trend analysis and trend following. I incorporate market structure in my analysis because I want to be on the right side of the trend, who doesn’t?

I can be the first to tell you being on the wrong side of the trend is no fun! What I look for is series of higher highs, higher lows, or lower highs, higher lows when looking at the weekly and daily time frame.

Practice makes perfect here. I specifically use the replay function on TradingView to practice using market structure in my trades. I use the line with markers chart to practice.

Volume Price Analysis:

Full disclaimer, the Volume Price Analysis concepts come from A Complete Guide to Volume Price Analysis by Anna Coulling.

I highly recommend reading her book as it is much more detailed then the brief breakdown I provide in the following paragraphs.

Volume Price Analysis: What is it?

It is an effort vs result principle. Effort is the volume. Result is the price action. I am going to use a soccer ball to explain this concept. Stick with me here, this is one of the most powerful and revealing technical analysis concepts.

For example, if we were to see a large candle, we would expect an equal effort in order to move price a far distance. If the candle is large, and volume is small, than institutions are not participating in the move. We always need to see large candles mixed with large volume, and vice versa. If it is the opposite, it is likely a trap for retail traders. VPA is crucial for my swing trading strategy.

Breakdown:

In the above example I am using technical analysis to swing trade $CAT. In the first picture, you should see the S/R flip concent and volume price analysis. Notice how price came to the white line twice during the weekly candles. Then price was able to reclaim the white line. When price came back to the previous resistance, it was able to find support there. This is the S/R flip concept that I use in my swing trading strategy.

Now notice the large volume and long lower wick candle pointed out by the white arrows on the stock chart. The spread, which is the open price – the close price for the candle, was very small. But the associated volume was the biggest volume print in the picture example. Back to the soccer ball example, the soccer ball was kicked (really hard) but price didn’t go anywhere. This tells us there was likely buying going on during that candle because of where price is at on the chart. What I mean is price was coming back to demand, we would normally associate this volume price analysis anomaly with buying since it is in a demand zone.

Now take a look at the second image. This is a stock price chart. It depicts the changes in the stock price based on the stock timeframe selected. This is how I track market structure. Notice in the image how the stock price created a higher low on the chart. This is an example of a bullish trend continuation, which is something I always look for using my swing trading strategy.

This trade has 3/3 things I look for using my swing trading strategy! See the result below.