Quick question/problem discussion - my issue off late has been that I end up with a very huge list of potential stocks and end up with analysis-paralysis where I trade nothing or what I trade does not end up moving \'immediately\'.
For context, I consider myself as a swing trader who likes to go with the quick and latest names and usually like to do a 20%-25% position size with a 10-20%% target and 3%-5% SL - at least that is the endeavor in my head 🙂 - Since the target is the quick 10%-20% which in my opinion can be found anywhere in the market, I avoid looking at the large cap slow movers like the ones which I notice you trade in - the FB and GOOGL of the world.
For example: Few stocks that seem to be making my list right now are APPS, DLO, GLBE, RVLV, EXPI, MP, FOUR. The actual list is far bigger.
As you can see, it is hard to choose the 4-5 stocks from the huge \'potential list\' - For example, both DLO and GLBE refuse to move in a way in which ASAN did - I have one 10% profit on both but I\'d rather have an ASAN than my capital blocked in either of these. This leads to analysis paralysis and the fear of missing out - which I realize I mostly do.
Any thoughts you can share from your humongous experience.
Great question because everybody has this problem. Too much information can lead to indecision. If you have 25 stocks on your watch list and need to narrow it down to 5 then there must be some criteria to do that.
I would weigh the chart setups from favorite to least favorite or maybe a number system. For example, one setup I like for a swing trade is the break of a downtrend line.
AMD is doing that today. That is usually a good setup for my swing trades. That would earn a "10" on the grading scale. You mentioned APPS. It broke its downtrend line last week, and has potential for a big move above $80 and that is a nice swing trade from the DTL break pattern. Another 10 on the grade scale.FOUR is a stock you mentioned in consolidation with a double bottom base, and maybe that is a pattern you have had moderate success with and may rate in in the middle of the pack with a score of "5" or somewhere in the middle range
Maybe your least favorite or least successful pattern is a flat base? That may rate a one or a two? That way you can weed out your stocks based on the chart pattern. As a swing trader you. are not concerned with the fundamentals.
This sentence stuck out as this is the type of math we are trying to achieve as swing traders: For context, I consider myself as a swing trader who likes to go with the quick and latest names and usually like to do a 20%-25% position size with a 10-20%% target and 3%-5% SL - at least that is the endeavor in my head 🙂 - Since the target is the quick 10%-20% which in my opinion can be found anywhere in the market.
If we can achieve 10% gains and 5% losses that is the holy grail of swing trading. A 20% gain will fund four new trades.
I rate setup just like I rate my stocks as it has helped me weed out my more favorable setups. That does not mean it always works out in the best for me. Sometimes the least favorite setup performs better than my favorite, and that's just the way it goes. But, at least I have a system to keep me form being paralyzed with too much information.
You need to create the system that works best for you and your trading style.
I hope this answers your questions.
Have a blessed day!