How to become a master swing trader

Secrets of becoming a successful swing trader by investing 10 minutes a day

I have a full-time day job and a part-time swing trader.  

March 2020 global market witnessed a deep correction in the equity and commodity market. The deep correction was followed by a mad bull run in the stock market. According to SEBI, around 10.7 million accounts opened between April 2020 to Jan 2021. 

Retail investors jumped into the stock market with an expectation to earn quick money during this raging bull market. However, swing trading requires a process, hard work. A good trade includes hours of preparation, chart analysis to find stocks in an uptrend. 

Swing trading and investment are serious business, not a quick money scheme.

Here is a simple step-by-step process with examples for your learning on how to start trading in the stock market

Swing trading guide for dummies

Select a mentor  

There is no formal syllabus to follow to become a successful trader. A person must do self-learning and spend time at the market. Mr. Market and loss is the best investment for learning. However, this takes time and rob off the conviction from the trader. 

An entrepreneur with self-doubt and hesitation can never be successful in this endeavor. 

A trader needs to select a mentor to learn the tricks of the business. A mentor should be an experienced person who is consistently profitable and pay regular income tax based on earnings. This implies mentor paid his fees to Mr. Market.

Assess sector strength based on market & economic cycle 

All financial instruments follow the “Wyckoff cycle” in all timeframes. This cycle consists of accumulation, growth, accumulation/distribution, and markdown phases. It is necessary to identify the strength of the industry with respect to the broader market. 

Wyckoff cycle for Bajfinance share price in the daily time frame

Investors can make fortune to identify those sectors early where stocks are just breaking out from accumulation zones. Top companies from those sectors are best for momentum and swing trading in the future and the cash market.  

Major sectors in NSE are   Banks & PSU, IT, Chemical, , Energy, Metal, Realty, Automobiles. Minor sectors are Construction, Services, Financial broking, Electrical equipment, etc. 

There are many indices like nifty50, nifty smallcap 250, banknifty, various index funds, ETFs in Indian Bazar which focus on the top companies of those sectors. Performance of these sectors specific indices with broader markets like Nifty50, Sensex, and Nifty 500 indicates the sign of early accumulation or distribution

A long-term trader needs to refer Balenthiran cycle which is based on 17.6 years market cycle. 

Source: Barry Ritholtz

Time is the most important aspect of trading and investing. Gann astro-technical analysis and Hurst time cycle analysis are excellent resources to learn trading and investment based on time cycle along with fundamentals.

Next article we will learn on how to create a stock trading plan

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