교육

What do you think of this swing trading approach?

Hi TV community.

This view is based on my own approach to swing trading.

METHOD

Select 60 PSU stocks
Trade only on the Weekly Timeframe
Exit trade when price hits 6.8% over entry price. (The 6.8% corresponds to one year FD interest rate of SBI)
There is no concept of stop loss with this approach as we give 52 weeks time for the stock to hit TP level of 6.8%. In most cases, TP level will be hit well within that period.

OPPORTUNITIES
After taking out all trading holidays there are 50 weeks of opportunities every year. So, with 60 stocks you will have hundreds of opportunities in 50 weeks.

I have personally experienced that this presents ample opportunities for regular trades. Since I trade only on PSUs, even if price slips for a couple of months, then also there is no stress because I know I will get dividend while waiting for price to hit my target price.

RULES THAT I FOLLOW

My capital is always 1,00,000 per trade.
Profit target is always 6.8%.

ADVANTAGES
This approach ensures that trading is very organised and systematic as the universe of stocks consists of fundamentally strong ones. As trading is on weekly time-frame, it helps in relaxed trading. Trading rules ensure that reward and waiting period are known in advance - so expectations are always grounded. Because the trades are only on PSUs, bigger capital can be deployed per trade with confidence. This discipline ensures that trading is approached with a business-like mindset.

So, as an ex-Banker, I always approach every trade with safety in mind and found that only trading PSUs as per the approach outlined above has helped me be profitable in the stock market.

Hope this idea makes sense and appeals to some of you.

All the best with your trading.