My Updated Trading Strategy "Y-SWING 2.0"

Hi everyone, I have just finished developing an updated version of my trading strategy Y-SWING, now Y-SWING 2.0. The main addition to my strategy is averaging up. Please note that this strategy has twice more steps and may seem more complicated than before. It will require more calculations, and that is why I strongly suggest you use an Excel file to make all the calculations for you (doing everything manually every time is too much work). This updated version of my strategy should be used by more advanced traders, and I don't suggest newbies to use it, it would be best to start with the first version of my strategy which is simpler. The main benefit of this updated strategy is of not investing all the money you intended to invest in one stock at once, and to give you the chance of being wrong and hit by smaller losses if the trade goes against you. At the same time this should help you maximize your gains, by adding to your position when the stock moves in your favor. Please note that I have yet to implement and experiment with this updated trading strategy myself, and will do so starting today. I will try to see if there is way where I could upload my Excel file online, so you could simply download it and not worry about building one yourself.

This trading strategy revolves around having a discipline. I have tweaked this strategy from time to time to perfect it, and this is the latest version of 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 2.0 Trading Strategy:

STEP 1 Determine the total value of your portfolio

STEP 2 Determine the maximum number of stocks you can hold in your portfolio
Note 1: If you have: less than $5000 = 2 stocks; $5001-$10000= 3 stocks; $10001-$25000= 4 stocks; $25000-$50000= 5 stocks; $50000-$100000= 6 stocks; >$100000= 6 stocks.
Note 2: If the total value of your portfolio is of $5000, you should have up to $2500 invested per stock ($5000/2=$2500 per stock); $20000 ($20000/4=$5000 per stock), and so on.

STEP 3 Buy stock ABC with 50.00% of cash, for your intended maximum position
Note 1: If the total value of your portfolio is $5000, meaning that you may hold up to 2 stocks with a maximum of $2500 for each stock, start by investing $1250.00 to open your position on your first stock. For example if the share price of stock ABC is $10.00, buy 125 shares @ $10.00= $1250.00.
Note 2: When your stock's share price fluctuates between -6.99% & +2.99% 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 4 Set -7.00% Stop Loss order
Note 1: If your stop loss gets triggered, take your loss and move on to another stock.

STEP 5 Set a Stop BUY order at +3.00% over your purchase price with 32.50% of your remaining cash for that stock
Note 1: If you bought 125 shares of stock ABC at $10.00 (for $1250), you should have a stop buy order at $10.30 ($10.00 x 1.03= $10.30) with 32.50% of the remaining cash you intend to invest in that one stock. So if you have $2500 as a maximum intended position, and have already invested $1250, you should add $2500x0.325= $812.50/$10.30 =78.88 ~ 79 shares ($813.70). You would now hold a total 204 shares, for a total of $2063.70 . The purpose of doing this (averaging up) is if the stock's share price starts moving your way it will be safer to add more money to your position and reap in more gains, while limiting your losses if you were to immediately invest all your intended position for that stock at once. If you were to invest everything at once you wouldn't give yourself the chance of being wrong, and despite having a -7.00% stop loss order, you would still lose more money.
Note 2: The risk when this order gets filled is to see your stock pullback below -7.00% before you get the chance to place a new stop loss order, in case you are not present when the order gets filled. This could and should only happen if you invest in very volatile stock, and is therefore better to set it manually if you invest in such stocks.

STEP 6 Cancel your Old Stop Loss order and set a New Stop Loss order for all your shares at -7.00% of your average purchased price
Note 1:Your average purchased price can easily be calculated: If your first trade represented an investment of $1250 for 125 shares, and your 2nd trade $813.70 for 79 shares. Simply do the sum of your investments and divide it by your total number of shares ($1250+$813.70= $2063.70; 125+79= 204 shares) $2063.70/204= $10.116 average purchase price. Now that you have your average purchased price, simply do $10.116-7.00%= $9.407 stop loss order.

STEP 7 Set a Stop BUY order at +3.00% over your last purchase price with the remaining 17.50% of your cash for that stock
Note 1: Still using our last example, your last purchase price would be $10.30. Therefore you would set a stop buy order at $10.30+3.00%= $10.609 with $2500x0.175= $437.50 for 41.23 shares~ 41 shares x $10.609= $434.969. You would now have a total of 204+41= 245 shares for $2498.669 ($434.969+$2063.70).

STEP 8 Cancel your Last Stop Loss order and set a New Stop Loss order for all your shares at -7.00% of your average purchased price.
Note 1: Your average purchased price would now be $10.198=($2498.669/245). Your new stop loss order $10.198-7.00%= $9.484.

STEP 9 Set -7.00% VTSO (Virtual Trailing Stop Order)
Note 1: The moment your stock increases +8.00% over your average purchased price, 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 exit your position without any losses.
Note 2: Withdraw 50.00% of your gains, while maintaining a minimum set total balance for your portfolio.

STEP 10 Cancel VTSO and Sell portion of shares representing gain
Note 1: The moment you have a gain of +20.00%, sell the portion of shares representing that +20.00% gain. You may choose to start selling before or after you achieve a +20.00% gain, it's up to you.
Note 2: Withdraw 50.00% of your gains, while maintaining a minimum set total balance for your portfolio.

STEP 11 Set new VTSO for remaining shares
Note 1: 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).
Note 2: Withdraw 50.00% of your gains, while maintaining a minimum set total balance for your portfolio.

STEP 12 Repeat Steps 10 & 11
Note 1: Withdraw 50.00% of your gains, while maintaining a minimum set total balance for your portfolio.


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.

With this strategy, each stock you buy should be from a unique sector.Some people may argue, that this strategy implies not having a well diversified portfolio. That is partially true, but the reason is because you have to be able to follow your stocks, and if you have a portfolio of 15 stocks, it will be hard to keep track of where each stock is heading. On top of that you will be diluting your gains.

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 separate 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%).