My Trading Strategy : "Y-SWING"

Over the years I have developed a trading strategy that all revolves around having a discipline. I have tweaked from time to time this strategy to perfect it. Please note that I use a virtual trailing stop order in this strategy, that I know many people do not have access to. You may use stop orders instead, but it would be preferable to adjust it up gradually as the share price continues higher.

Y-SWING Trading Strategy Steps

STEP 1 Buy stock ABC
TIP: When your stock's share price fluctuates between -6.99% & +4.99% for 28 days (20 business days), you should sell the stock no matter what the price and move on to another (Unless you strongly believe that the stock is about to make its move and move in the direction you desire, whether you are long or short)

STEP 2 Set -7.00% Stop Loss order
TIP: If your stop loss gets triggered, take your loss and move on to another stock.

STEP 3 Set -7.00% VTSO (Virtual Trailing Stop Order)
TIP: The moment you have a gain of +8.00%, set an average -7.00% VTSO, based on the average purchased price -7.00%, and the current price -7.00%. You will now be guaranteed to make a profit on this position.

STEP 4 Sell portion of shares representing gain
TIP: The moment you have a gain of +20.00%, sell the portion of shares representing that +20.00% gain.

STEP 5 Set new VTSO for remaining shares
TIP: For your remaining shares set an average -7.00% VTSO,based on the average initial purchased price -7.00%, and your last sell point -7.00% (Step 4).

STEP 6 Repeat Steps 4 & 5

NOTE 1 Withdraw 50.00% of your gains, while maintaining a minimum set total balance for the value of your portfolio. The moment you reach Step 3, you are guaranteed to make a gain on your position.

I used to use a -8.00% stop loss order, but from my experience every stock that went down -7.00% fell also to -8.00%. So I changed my stop loss order to -7.00%, to not give up that extra 1.00%. If you have a more or less risk tolerance you can adjust your stop loss to your liking. What is extremely hard when you start trading, it's the inability to take losses, and set your stops in advance. When I first started trying to apply this strategy, I found myself either canceling my stop orders before they would get triggered or wait till it hit my stop loss target and tell myself I would just place a market sell order then. It took me about 2-3 years to be able to accept the fact that I had to take some losses. The most successful traders have more losing trades than winners. The reason is because, those traders cut and limit their losses while when they start making gains they try to ride those trends as long as possible and will make huge gains. If out of 3 trades, 2 represent losses of -7.00% each, while your winner made you 40.00%, you are profitable, and that's the goal of this strategy. Most people will hold on to losses and hope they bounce back, while they quickly sell their winners because they're scared of losing it when they have it. Think of it like this, if you are making gains it means that you are doing something right, and probably made the right call, and you should hold on to it as long as you can or as trend persists. The beauty of this strategy, is that even if you're not good at picking stocks, by limiting your losses, the chances are that you may be profitable in the end. You may get frustrated, if you get stopped out several times consecutively. If this occurs, you should set back and stop trading for a little while, and try to figure what is it that you're doing wrong.

Notes 2
Ideally this strategy is to be used with a well diversified portfolio with 2 stocks during uncertain times, 3 stocks during normal times, and 4 stocks during a clear up or down trend, either on the long or short side. For example when there are signs of a change of a trend, let's say from a bull run turning into a correction, you may already turn bearish and have 2 short positions. When the correction is not completely into motion you may want to keep your 2 short positions and add one long position. During a normal/decent bull run (up trend), you may want to hold 3 long positions, and up to 4 if you are extremely bullish. Ideally you should have a minimum cash balance of $10,000 for this strategy, by investing around $2000-$2500 per stock. The more you can put for each stock the better (the easier to make some more cash gains), but it doesn't really matter since it's all relative to the total money you have. With this strategy, each stock you buy should be from a unique sector.

Notes 3
This strategy allows you to be disciplined and well diversified, and to cut your losses @ -7.00%, while cashing in gains as they come along. You may need to follow the price moves of your stocks almost everyday, while paying close attention the technical charts when the price gets close to one of your buy or sell points If there is a crash, despite having stop losses, the stop losses are not active during pre-market and after-hours, you would need to place a seperate live order, and even if the stops were active during these periods you still won't be completely protected. If a crash occurs the first opening trades during the pre-market for example may be much lower than the previous day's closing price and may be much lower than your stop. For example assume you bought stock ABC @ $10 with a stop @ $8, and the price closes for the day @ $8.25. If a crash occurs the next day, when the pre-market opens the bid and asks could be $6.00 and $6.50. However, if you trade in the stock market this is a risk you have to assume; Only the careless would invest all their money that they have earned over the past years, it is important to cash in gains each year. For example when you first started trading you started with $10,000 and over the years you accumulated $5000 of gains. You would be stupid to invest your $15000 and risk all everyday, you should continue to invest $10000 and cash in the $5000, or just each year increase a little bit your investments if you can afford it to maybe $11,000 or $12,000. The whole point of this strategy is to cash in gains when you have them while continuing to investing the same amount of money without risking more, so that in the future your $10,000 investment may only represent a portion of gains you have accumulated over the years that you would otherwise never have had to begin with.During accumulation periods when the market moves sideways it may be harder to successfully use this strategy either way, you would need to be more precise in your buys and sells; and you may need to lower the profit point where you decide to take some profits or sell your position completely (for example selling portion or all shares of gain @ 10%-15% rather than 20%). Problem: When a stock moves up around 10%-15% and starts pulling back what do you do, do you leave it fall back to your stop loss and take a loss? Solution: You will have a -7% VTSO in place, meaning you are guaranteed to leave with +3% to +8%.