Just a heads up I almost have the whole site moved to the new server and will be making the live switch within the next 90 minutes. There should be no hiccups but just a heads up if the site gets messy you know something didn’t go right .

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My name is Paul Singh and I am a part-time swing trader with a day job. I have been trading and researching market strategies for over a decade. The following five tips helped turbo charge my portfolio and reach my trading goals. My hope is that they will do the same for you.

1. Swing trade your way to profits - Swing traders hold stocks anywhere from a few days to a few months, depending on trading strategies and market conditions. While there are many different trading strategies, most seek to identify and capture a trending stock’s “sweet spot” or the bulk of the trend. This type of trading is conducive to the part-time trader, since precise entry and exit is not the goal, and you don’t have to watch the ticker around the clock.

2. Develop bread and butter trading strategies - Every successful athlete needs a “go to” move, and traders are no different. Successful traders rely on bread and butter strategies to maximize their profit potential. My toolbox of strategies include break out-pullback, trend pullback and post earnings trades, to name a few. My quest to become an expert in these strategies has lead me to know the details of these trades better than I know the back of my own hand.

3. Build a strong watchlist - Watchlist development is the key to successfully trading part-time. Every evening, I identify 10-20 “primary watchlist” stocks that will receive most of my attention the coming trading day. These stocks are culled from my master “focus list”, which is developed over time by an organic process that looks for stocks based on my bread and butter strategies.

4. Identify entry and exit points for primary watchlist stocks - When picking stocks for the primary watchlist, write down the price that would get you to enter the stock, and the expected target and stop-out prices. Base these prices on your bread and butter strategies. For example, if a breakout strategy identifies $25 as the level that will propel the stock higher, mark this level as your entry point. If $30 is the level you would take profits, mark this as your target. Most important, figure out how much you are willing to lose and mark this as your stop-out level. Most traders want the stop out level to at the least match their target level, while risking no more than 1-5% of their portfolio. In this case, your stop-loss would be no lower than $25.

5. Let your target and stop levels do the work - Once you have entered a trade, there is an overwhelming temptation to continually eyeball your positions. This can lead to over trading, which can be detrimental to the swing trader trying to hit that sweet spot. For this reason, my advice to the part-time trader is to turn off the quote feed once the trade is made. You’ve already researched your positions and set target and stop levels. It’s now time to let your analysis work itself out. With risk analysis and a stop loss order in place, the probability of a disastrous loss to your portfolio is minimal. So sit back and relax. Or better yet, focus on your day job!

Following these 5 smart trading tips will do wonders for your portfolio, evolution as a trader, and ability to manage time and stress levels. In future posts I will dig deeper into the intricacies of trading with these tips and detail what it takes to be a successful swing trader.

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Filed Under Stock Trading | 8 comments!
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I have successfully updated and uploaded the new stock forum design which you can see here and discuss here.

The new template was done by David from EyeStorm and I couldn’t be happier. The next step is to move the whole forum to the stocktradingtogo.com domain and the new server. Once this transition is completed you will be able to find the forum at www.stocktradingtogo.com/forum.

If you haven’t registered to become a free member then now is better than later, so take 30 seconds, get yourself registered and feel free to introduce yourself to the community.

About the Forum: For those who are unfamiliar with the forum, I co-founded it back in December of 2005 and it has since grown to house as of this entry 4,730 members and 10,549 total posts. It was originally launched as a part of the Falkin Investing Organization and today is still a great place to discuss a wide variety of investment related topics.

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We’ve heard it a million times from all of the financial gurus out there: buy low and sell high and you too can retire with huge mansion, multiple luxury automobiles and a stock portfolio that is mimicked by thousands of followers. While the advice may be simple, it is definitely not easy for the vast majority of us. But why? Shouldn’t it be easy to pick a stock that has fallen a great deal and then ride it all the way to the end of the rainbow?

The short answer is no. One of the reasons is that when a specific stock tanks or the overall market dips, it’s usually for a specific reason, or even a multitude of reasons—the stock missed their earning reports, competition is squeezing or eliminating profit margins, a recession is looming, interest rates were adjusted, or currency fluctuations on the international stage suddenly sent stocks jumping around. How are we supposed to manage all of these different factors? How can we even know if a stock is “low” or if it is “high”?

Many investors lament over not jumping into the “next big thing” only to watch it skyrocket—take the China stocks that have rallied over the past year for example, or the Uranium craze from a year earlier. We’ve all done it. Pull up any chart for any stock as start to mumble, “if only I’d bought a year ago (on the dip) and sold here (on the rise) and then bought again right after it bottomed out… I’d be a billionaire by now!”

Can we predict the future? The answer is definitely “yes”! The unfortunate news is that we just can’t predict it very well. We can definitely predict that a stock will, at some point during it’s run, become overvalued, while at some point it will probably become undervalued. If you are a trader (as opposed to a long-term investor), the trick is too buy it when it’s undervalued and sell it when it’s overvalued.

A stock is usually undervalued when it is not popular among the majority of investors—this is when more orders are put in to sell the stock then their are buyers at a particular price, and as a result the stock price drops. The trick for savvy investors is to disagree with the majority of the investors about the future of the stock… and to be right.

Ask yourself some key questions the next time the overall S&P market drops 300 or 400 points. Do you agree with the gloomy forecast? For example, is there really a recession coming? Will the U.S. dollar remain weak? Is the sub-prime mortgage meltdown completely over, or is there more pain on the horizon?

More specifically: if one of the stocks that you are tracking has pulled back because of the overall market and not because of any specific information that pertains to that individual stock, then it may be a buying opportunity. After all, if you really like a sweater at the mall, and then one day it’s on sale, wouldn’t that be a great time to buy it? You wouldn’t say, “The sweater’s on sale today. There’s no way I’m buying it! I’ll wait for the price to come back up first.”

Instead of industry-wide concerns that affect the stock market as a whole, the questions you ask can also be stock or company-specific. Do you agree with the analysts estimates that future earnings will be weak? Is the future of the company looking great, or are there stormy days ahead for the company on your “watch list”?

What about the overall market for the product? Competition for the product? Are there expansion issues, or even management issues? These are all variables that can affect whether the company will increase (or even continue) it’s earnings, and this will hopefully send the stock higher.

If you have a stock on your “watch list”, and the price has recently fallen but the fundamentals remain unchanged, then consider it a bargain and consider buying it. There are a few critical steps that must be taken before buying the stock:

- Print off the annual reports for the past two years and read through them. They are almost always available on the website. Don’t just pour over numbers, but read the plans for the company and check out what all of their products and markets are.

- Decide if the company is a long or a short-term hold. If it’s a short-term flip, then be diligent, put in a stop-loss order and also a sell order on the high side. Be disciplined instead of greedy and take the money if the stock reaches your sell price. If it’s a long-term hold, then buy it and tell yourself that you are not going to touch it for at a year (and hopefully two) unless there are radical changes in the company’s direction (NOT the overall market’s direction).

- Buy on the dip. “You make money when you buy, not when you sell”. This old saying has been used in the real estate business for decades. Wait for a short-term drop and pull the trigger.

Buying stocks takes guts—especially when it’s dropping. Do the research and make that decision based on intelligent risk calculation instead of guesswork.

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