Why Swing Trading Strategies Won't Work
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- Опубликовано: 31 июл 2024
- Swing trading vs long term investing, which is better? Anyone who needs to ask that question hasn't suffered through trial by fire. At some point in every man's life, two things happen. He decides that making lots of money would be a really cool way to sleep with lots hot girls (or guys, we have nothing against those who bat for both teams), and that the best way forward is to try and shortcut the wealth accumulation process. Wait two decades for wealth to accumulate? Okay boomer. That's when they hear from one of their mate at the pub - the one who doesn't have a pot to piss in - that swing trading is the golden ticket. And the best part? You don't even need that much money to get started.
After paying "Bob's Swing Trading School" the obligatory $199.99 for a two week cram course on candlestick charting and stop losses, you're off to the races with your $1,200 tax return (minus Bob's course fees). After a few months of beginner's luck, you've lost all your money and you're wondering why. Fortunately, you've ended up at the doorstep of some people who have done just that themselves. It's okay, you fell for swing trading just like everyone else. We're here to help.
RESEARCH PIECES USED IN THIS VIDEO:
1. The Nanalyze Disruptive Tech Investing Methodology
www.nanalyze.com/nanalyze-pre...
2. Investing in 2023: It’s All About Managing Risk
www.nanalyze.com/2022/12/inve...
3. Short Selling Explained
• What is Short Selling ...
CHAPTERS:
Intro
Trading vs investing
Day trading vs swing trading
An example of swing trading Tesla
Candlesticks and stop losses
The myth of the prop trader
Trading today's bear market
Getting a financial education
My life as a trader
How to be a swing trader
Conclusion
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thanks Nanalyze you are a force for good in the world.
@@Jop_Kop Appreciate the kind words!
Well I get your point but swing trading is far more better than day trading in terms of large profit taking and less trading plus its closest to investing because you trade based on the direction of the trend. Day trading is all about finding liquidity zone, order blocks, value areas and support n resistance and the market provides random points where it'll reverse. We are different so I prefer swing trading rather than gambling in day trading
Timing the market is gambling, it's not investing. We're investors here.
@@joepiv well that's your opinion on it and I respect that even though I highly disagree
It's a fact that most retail investors get their asses handed to them when they try to be BSD traders, not an opinion.
100% with you about the nonsense of trading. However I have to confess that I do use a bit of technical analysis in the context of investing: when I decide to the build a position in a company, I split the size in a few smaller chuncks and give myself some time to buy them, with dollar cost averaging. I use technical analysis to decide when (in that month) I will buy my next chunk, once the other overall conditions already meet my criteria
That's a nice way to supplement a prudent strategy with some elements of excitement. It's not a bad idea. How objective is your technical analysis? Seems like the ideal method would be as rules-based as possible. Giving yourself time is great as you DCA into a position, especially these days, because the overall trend is still moving downwards.
It is moving downwards and I believe it will continue. However I also have the impression that some growth stocks have alteady been punished a lot: giving that none knows when bottoms are reached, starting building a position on some reasonably valued companies doesn’t seem a bad idea to me. Regarding technical analysis, I keep it really simple: I check main trendlines, supports and stuff like that. I do not believe these make any sense, to be honest, but somehow market seems to follow some schemes, maybe those are just trading algorithms reinforcing expected prophecies….. By the way: you may consider making some videos on Veeva Systems and Shockwave Medical. I am studying their balance sheets, investor decks and the solutions they offer: quite interesting I must say
Thank you for the added color on your methods. Bear markets are the best time to be adding - slowly over time, because nobody can call the bottom. Not sure if you're a paying subscriber but the best thing to do is to drop names you'd like to see covered on our Discord server. Those seem like interesting companies and would likely be paid research pieces as opposed to free videos. Right now video topics are focused on what can draw the most views/subscribers. We need a much larger audience to justify the time we're spending on this channel. Thank you for the engagement!
You’re crushing it Joe! Thanks for covering the essentials now and again 👌🏼
Do you have thoughts on dividends vs 5% yield on bonds these days? It might’ve been worth mentioning trading BTC too
Joe here. Going to be honest and say I was chasing the SEO here on the term "swing trading," but many other people are also chasing that term, so the video failed to achieve the traffic I hoped for. Nonetheless, the lessons are valuable and worth articulating to the masses.
The high yields due to high interest rates are great for the spare cash you have laying around, not so great when it comes to the "fixed income" part. We only focus on growing income streams - DGI - because these stand the test of time. As for BTC, we have some (~1 of assets) and don't have much to say about that. Watching the whole SVB drama unfold with a great deal of curiosity. Looks like we correctly identified the MBS risk for Silvergate back in June 2021: www.nanalyze.com/2021/06/silvergate-capital-cryptocurrency-bank/
Probably not the video that I wanted, but definitely the video that I needed. 🤓
Well said. It's a phase we all go through.
Powerful message!! Definitely passing down to next in generational line... wealth generation being the main objective: it's uncanny that I mentioned my Tesla activity earlier in response to your previous content on the very day you release this.
Proceeds went into other value and yielding assets. It was simply too hot too fast for me to not trim, especially given my understanding of their curcumstances. The sentiment of your message is already firmly in the psychie here. Siblings are getting it drummed through them as well.
Thanks for sharing these teachings.
Thank you for taking the time to share some thoughts. Each investor needs to find their own path and tolerance for risk which will change based on how much money they have, how old they are, life events, when they need money. etc. When you're young, it's always easy to believe you're the exception to any given rule about how wealth gets created. It's best to get these lessons out of the way as quickly as possible.
This is exactly what my gut feeling was when looking into "stock market trading". I didn't know how to formalise it, so I searched "swing trading market efficiency" and found your video! It's good to have reassurance that this swing trading mumbo jumbo that everyone spouts is absolute nonsense.
We're very glad you found this video useful! Start investing, not trading, and you'll be very happy you did down the road.
Thank you for you Honesty and Hard work on these Videos ... Appreciate it !!!!
Really glad you find our videos to be of value
@@Nanalyze Go ahead and delete and block the guy because clearly you're one of the feminine men this society. I can see people looking down on you in real life. You live in a shell bro. Lol
Joe, I appreciate you taking the time to make these educational videos. You are a great teacher and you explain concepts in a straightforward, no BS, manner that is relatable and understandable. If you feel inclined I’d like to see one that really explains various forms of share dilution. If “authorized shares” can just be added to the “shares outstanding” whenever a company feels like it, how is that OK? I’d understand if market cap was based on total Authorized Shares, but since it is based on Shares Outstanding, and releasing more shares to that pool does not add any additional raised capital…why is it even legal? It seems like stealing…but that is probably because I don’t understand this subject well.
Joe here. This is a great comment and the topic has been raised numerous times. Even more questions surround stock based compensation. I need to sit down and walk through everything slowly so I can properly understand it well enough to explain it simply. This is on my to-do list. Glad you're enjoying our videos!
Good advice sir. Thank you.
You are quite welcome.
For those like me who do trade. These are my rules 1) have a small trading account +/-$5,000 and play around recognizing that you're never ever going to generate an income from trading. 2) Do not borrow to trade. 3) Trade in the one month to three month time frame. Excellent video. I worked at trading firm for 4 years. There are a few good traders but generally speaking 99% will lose all their money and then some.
Thank you for the great comment! Wish more people knew how dangerous trading is.
I hear you man! Great educational video!🏆🏆🏆
Glad you enjoyed it!
Great video as always. Personally, being from Brazil, i think i'm in paradise when i invest in the USA. I just choose a good company, put 1k USD on them, and I forget about these stocks. Never touch them again, even if everyone is saying the company will go bankrupt. Many of these companies operate here in Brazil as well, such as PG, AMT, MDT, CL, WMT, EQIX, UL, JNJ, LIN, MCD, PFE, PLD, and many others. So investing is easy, specially in America, where you have so many good companies you don't need even to buy the same company again and again, increasing the risk. Regards.
Great comment. We absolutely love hearing from people across the globe (50% of our subscribers are outside the States) who are becoming successful investors. Well done! As they say, "set it and forget it." Lots of good names you've mentioned there. We're in five of those as key holdings in our 30 stock DGI portfolio.
Great PSA
thank you
Glad it was well received!
Great channel
Thanks! We appreciate the positive feedback :) -Wyatt C
I have noticed taking profits when your stock does a flag pole move is often successful.. when it climbs 10% in a day
For a long term investor, that's just noise.
thank you very much .
You're most welcome
Confession.... I was a sucker. I was sold an algorithm software which when "backtested over the last 20 years" outperformed the market with only 1% downside trading 2 etfs.... It was shit.
Now i DCA
Thanks for the reminder
Joe here. Trial by fire is the best way to learn. The sooner the better. The amount of times I was a sucker in my life I couldn't count. It was all about chasing the quick way to wealth, whether through multi level marketing schemes, selling door-to-door, or "day trading," I tried it all. Only after some years did I learn that slow and steady wins the race. There are no shortcuts. DCA is the way forward! Thank you for sharing your own experiences.
Sounds like the back testing was not up to par.
Trading always seemed quite intriguing, but intuition or brain says it doesn't make sense.
Also the big difference is trading is a zero sum game, or probably even worse. While investing is not, economy grows, dividends...
Toyed around with Tesla options (the German ones) and yeah it's quite an unreliable way to make money lol. What's intriguing there it can go up so much but only loose 100%. Those 500-1000% wins sure are fun.
Generally I think the only time trading can make sense is being opportunistic. Like seeing an opportunity in the market because of some macro move or something happening in a company the market hasn't priced in.
But still that's just betting.
Yep, the market can encourage one to start speculating, and it's tempting to say, "I'll just have some fun with this." It's sometimes difficult to avoid considering puts when looking at some of the absolute trash out there. However, we always stick to our rules of being risk averse. You can easily nickel and dime yourself to death trying to speculate here and there. When you get older, you start to value SWAN more than anything - Sleep Well At Night.
That's a ridiculous claim. There are thousands of swing traders that are very successful. So, the title of the video is immediately false.
This is reality. Yes, there are some man bites dog stories out there. What's completely ridiculous is suggesting anyone should pursue this tripe as a method of wealth creation.
Broadly speaking, there are two types of people who try and argue against the realities presented in this video. 1) People who sell swing trading strategy courses and 2) the people who buy them.
@@Nanalyze I'm saying that you shouldn't make broad general statements like that. It's one of the biggest problems in this industry. It's never that simple.
@@matthewgent1788 It is that simple. The vast majority of retail investors who engage in swing trading will have their asses handed to them. The biggest problem in the industry are the selfish morons who suggest otherwise because they're trying to peddle shite. Simple.
@@Nanalyze that statement is misleading. Of course "the vast majority of retail investors who engage in swing trading" fail, because over 80% of ALL retail traders fail trading any strategy! Your statements are either misleading or misguided and I'm not going to continue this discussion with you.
Good to hear. Because you have added precisely zero value to the conversation.
Most market timing signals dont work. I backtested moving averages of any length for the last 20 years and all lagged buy and hold.
Correct. Buy and hold is how wealth is accumulated, not trading.
Can you do a stock analysis of inmode please?
We take requests from paying subscribers on our Discord channel, but do pray tell. Selling a fad product that makes women think they look younger isn't at the top of our list ;) That's based on a cursory look, but perhaps you know more?
What about those successful traders featured in the Market Wizards books?.
Yes, there are some man bites dog stories out there.
@@Nanalyze In my opinion , those are cases of random luck.
@@davidr6914 You might be right about that. I recall reading that book in b-school. Joe P.
OMG! I planned to swing trades with my Roth IRA account.🙆
Try to max out your margin and then YOLO your way into whatever stonks are being the most heavily discussed on Reddit. Just remember, if you don't go big, you'll never be able to wen lambo. Just ape into those trades with diamond hands and remember the single most important mantra of all successful traders - risk management is for pussies.
@@Nanalyze
I conclude this is a bad idea.
What is the success rate of investors?
With sufficient time and discipline, and adherence to basic risk management principles, 100%.
Good presentation. One question: What about Jim Simons (Renaissance Technologies)? Even Buffett and Munger doff their hats to him.
The Medallion Fund at Renaissance, run mostly for employees of the company, has one of the best records in investing history having returned +35% annualized over 20 years. The two co-CEOs of Renaissance were both hired from IBM Research in 1993 where they were working on language-recognition programs. We covered that here: www.nanalyze.com/2020/05/machine-learning-for-stock-trading-strategies/ It's safe to say Jim Simons isn't peddling a "How I Made My Wealth At Renaissance" program for $249.95.
True, unless you’re a math genius like Jim Simons who somehow figured it out. But I know full well I’m not Jim Simons.
Glad you mentioned Renaissance. The Medallion Fund at Renaissance, run mostly for employees of the company, has one of the best records in investing history having returned +35% annualized over 20 years. We wrote a piece on machine learning and quant trading here: www.nanalyze.com/2020/05/machine-learning-for-stock-trading-strategies/
I just want to add Warren Buffett and most banks and investment banks only swing trade so i'm very confused why i wouldn't do what ever billionaires do😅 dsy trading is for poor people and countries with low tax
No, Warren Buffett does not "swing trade." If you want to end up in the poor house, have at it. You've been warned. ;)
Liked " take accountability for bad decisions ."
Neoteny is a biological term for the delayed onset of adult maturation that - some say - is caused by a lack of stressors in the external environment. A generation of people who have never seen tough times leads to a victimization culture where it's always someone else's fault.
Swing trading is a bad idea. Changed me mind..
Lots of people selling courses claim investors can become a BSD but in reality they all end up in the poorhouse and only one person gets ahead - the person selling shite courses.
It’s a coin toss
Precisely right. Kind of like betting on red or black.
Well, it's pretty simple, you are either making money or you are not. Traders can and do make money. If it doesn't make you money, then you will know it, and if you don't, you probably shouldn't be working with numbers.
Yes, there are stories of man bites dog, but mostly it's the other way around. And regarding your last remark, many the fool has beginner luck and thinks that trading is easy. It isn't. For a vast, and we mean VAST, amount of people it's a way to the poor house until they realize that investing is how you accumulate wealth, not treating the market like a casino.
trend trading seems more stable then swing trading
We wouldn't encourage trend trading either. It's still not investing. -Wyatt C.
@@Nanalyze so holding out for at least 10-12 months is still not encouraging? ive seen people who held positions for almost a year and still made profit its way better then swing trading in my opinion less time on the screen im not saying long term investing is bad though i like that too
We're not saying it's impossible to make money swing trading or trend trading. It's just that over time the vast majority of people who do it fail to outperform the market. We look at our investments on a much longer time frame than 10-12 months, in order to avoid any kind of short-term volatility. It's just noise in the grand scheme of things. -Wyatt C.
Umm, you can trend trade with a swing trade approach you plank...
I have been both swing trading and investing over the long run and I have to admit that swing trading over the past 10 years have worked for me I may be an exception
lol
You need to put a TEENY bit more effort into your comments around here for them to be allowed. Now we get that you got the giggles because you just toked one of the three footer, but elaborating on what you find so funny helps make it fun for everyone else as well ;)