A simple method to swing trading

As a professional in the biological sciences, I transitioned my career first from a job in the pharmaceutical industry to my own consulting business with part-time trading and now I spend as much time trading as I do running my Pathology business. At first, I did not want my trading to interfere with my business because that was my main source of income. That has changed now, but I do retain the view that time is money and that my trading should be profitable on an hourly basis compared to a job with a 401K account. Therefore, a successful trader must beat the performance of the S&P500 and exceed it compared to a job that he could otherwise have. Otherwise, it would not be worth it. You may say, but what about the freedom of a full time trader? I think that one must keep his/her mind occupied in a productive endeavor most hours or our lives, so freedom is a relative term. I for one work as much as I always did, and that is how I am happy.

The fact is that a good trader must have a time-effective approach to the markets. I recently experimented with day trading futures and found that it was not time-cost effective. One could spend hours looking of the right opportunity and end up feeling pressure to trade when there were no good set ups. The inevitable effects are frustration, fear, stress and psychological defeat. I soon learned that to day trade successfully, the first obstacle is one’s one psychology and the second is the profitable use of one’s time. Time is money!!! It becomes critical that one spends as little time as possible in the identification and selection of candidates and trades, otherwise you are simply in an expensive hubby.

Compared to the 1990’s, the internet has provided us with a explosion of technology as of late. There is great number of resources that can provide us with the information we need. Take for example Yahoo finance, FINVIZ.com, Stockcharts.com and the ThinkorSwim platform, all providing free resources, and other paid services such as Optionetics Platinum, Telechart.com and Iqcharts for paid services. Locating and selecting big opportunities has never been easier. So, why do we complicate it all by listening to advisers, gurus, commentators and pundits? why not just follow our own advice?

You need to answer this question: when does a stock becomes a good candidate for trading or owning? The answer is deceptively simple yet most people would probably not see this answer because of confusion, information overload, lack of patience, fear or simply the lack of the tools to take advantage of that situation. Let me illustrate my case with an example that everyone can relate to. May 5th, 2003: Apple Inc, [AAPL] releases an important piece of news

Top News Story: Apple's Online Music Store Sells 1 Million Tracks

* Apple Computer Inc. said on Monday that its iTunes music store, which opened for business a week ago, had sold more than 1 million songs at 99 cents each, a figure that record industry executives said topped internal expectations.
The rest, as they say, is history.
But let’s take a look at the signs, we traders (or investors for that matter) could have identified and what potential trades could we have made to take advantage of this once-in-a-lifetime opportunity, and how do we identify similar opportunities going forward....




On May 2, 2003, a time when most investors were dismayed of the last 3 years of bear market action, specially on AAPL, which had fallen from $60 to the close of $14.45 on that day (The chart shows a split adjusted sa $7.23 a share). On Monday May 5th, 2003, AAPL closed at $16.1 (sa $8.05) after having opened at $14.78 (sa $7.39). By the close, AAPL had appreciated by 11.42%, having been as high as 16.8% on that day. Here is my message: AAPL jumped ≥10% compared to the previous day’s close.
Understanding the significance of the news is easier today than it was then, but clearly it was a paradigm shift in the music business and AAPL was there in the center of it all. Today AAPL is the biggest seller of music in the world and the benefits for shareholders are obvious, as the stock is currently trading at 26 times the closing price on that day. A lot of 100 shares costing $805 (sa 50 shares) would be worth $20,445 today.
Now of course not every stock turns out like AAPL, and buying stock is inherently risky, since any stock can go to $0. However, you have a hedge when you trade the ≥10% spikers, provided that the reason behind the jump is significant for the long-term future of the company. But there is one more important factor to my approach, and it is the user of options to both limit risk and leverage the rewards. Please join my group if you want to see the potential in the use of options in swing trading.
For now, let me state the secret here again: use the platforms currently available, both free and paid to locate the spikers and find the rational behind the jump. Only a few seconds a day may be enough to pick the AAPL’s of the future. This is a simple methodology that is available to everyone. You do not need any proprietary secrets, or software, nor do you need the advice of any Guru or an insight into the secrets from big institutions. All you need is a few minutes a day, and mostly freely available resources of the Internet.
If you join my group you’d have available, video tutorials, question and answer forums and 3 weekly webinars to coach you into trading success. I ask for a small contribution as well as your commitment to Pay it Forward!