Monday, 7 May 2012

My Swing Trade Edge

One of my "edges" for swing trading is the use of options. This allows me to make money in a trade in 2 out of 3 outcomes: the market moves in my "predicted" direction or the market doesn't move much against me. To really lose, the market has to quickly do the opposite of what I thought.

The markets this morning are down fairly hard after the Greek and French elections. The election outcomes are not a surprise for those of us living in Europe and it was not too hard to position myself for stock index weakness, especially after Friday's U.S. trade.

Swing trading is a much more forgiving occupation than day trading as there is much more time to make decisions. The downside is that more capital is required due to margins and draw downs. However, even smaller accounts can swing trade using options. However, there is a requirement for an extra layer of education. In addition to the technical analysis, getting the correct option knowledge is very important. the saying "It’s not what you don’t know that hurts you, it’s what you do know that just ain’t so."

The DAX opened down and I was looking for a place to buy it as the shorts would start covering and I wanted to benefit from that move. I got two trades out of it as you can see from the pic. The first I exited at the 33EMA and the second at my FavFib. Each trade gave more than 250 Euros per contract profit. I could have been done for the day. But as a little "greed is good...."


  1. Why were you buyng into a downtrend? Did you have favorite fibs there? Or were you buying the higher lows?

  2. Anon 09:53, I knew there would be short covering after the open: ES had stablised. MP showed where and higher low was the trigger.