The Ultimate Swing Trading Playbook: How Concentration and Volume Drive Big Wins

Guide to Ultimate Swing Trading

I went $35K to $8M in 21 months by going all-in 1 stock at a time.

I did this mainly via "swing trading".

Here's how it works:

What is swing trading?

This is not investing.

And it's not day trading.

I picked single stocks and plowed every dollar into shares.

Held positions for days to weeks to months sometimes.

Watching the charts and praying everyday.

Or exiting if all hope is lost.

Volume is very important

The #1 thing I look at is volume.

To me, volume is a measurement of how many people care about this stock. Increase in volume is generally good while decrease is bad.

I specifically look out for these two things:

Was there a mid-day increase in volume all of a sudden? Pay attention

Was there some positive news or an increase in social chatter but the stock doesn’t seem to be moving? Don’t bother

CLOV here is a good example of a mid-day volume spike.

If the average volume remains elevated and volume continues to increase then it’s very good. It could imply another pop to come like it did a few days later.

CRSR was the opposite.

No matter what new products or analyst price targets came out, volume just kept decreasing, implying people don’t care much about this company as much anymore.

Attention moves price long before fundamentals do.

Catalysts are super important

There has to be a story.

Some interesting catalyst that gives people “hope” in the short-term for upwards price movement.

Combined with an increase in volume, that makes a good swing stock.

Like:

Potential ETF inclusions

Biotech and FDA approvals

Earnings coming up

Keynote speeches and conference talks

Basically with each catalyst I think about the potential of it happening, how soon it might happen, how much will it impact the stock price, what happens if it doesn’t happen (do you still like the company?), and why hasn’t the market already priced it in?

Having a real understanding of the actual company and industry helps a lot with this. Knowing how long it takes to launch a new partnership or what’s really going on with the supply chain can give you an edge rather than just reading headlines and secondary sources about the company.

Draw a support line

It's really simple.

SKLZ for example here fell back to it’s 2020 support line after a crazy rollercoaster of a year and bounces around on it.

I like long declines like this because it implies to me “all the bagholders have finally given up and left” thus free-ing the stock for a potential reversal or bounce. 

SKLZ did indeed bounce off the support line which made a great scalp.

Is the thesis alive or dead?

Every day I asked one question:

Is the reason I’m in this trade still true?

If yes, I stayed.

If not, I sold.

I'm totally okay sitting on a -10% loss for months if the thesis is still alive.

But if volume fades or the catalyst fails, then hope is gone.

Don't marry a stock. Just sell it and move on to the next one.

Patience wins

TBH most of the time nothing is happening.

I only made like 18 trades that year. 

You're just processing information and waiting.

Then occasionally something stands out.

A volume change.

A reaction that doesn’t make sense.

And it’s time to make a move.

Ultimate Swing Trading

"Diversification may preserve wealth, but concentration builds wealth" - Warren Buffett 

My version of swing trading is to basically go all-in with everything you have on your highest conviction stock.

Just 1 stock.

It's so simple. 

Highly recommend it.