Support &

Bet Sizing
Position Sizing
& Stops

Trade Management

The Rest of the


Stock Selection
Stock Selection
& Scans

Reading List
Reading  List

Welcome to Constant Risk Swing Trading
If there is a Holy Grail for trading it is in position sizing for constant risk and sensible trade management   Position sizing (AKA bet sizing) will improve the results of any system but is a particularily good fit with swing trading since the swing trader can so easily determine the risk for any given trade.

The constant risk swing trader will take trades as price moves through a support/resistance area into a new range or bounces off the s/r band and swings back the other way. He will size the positions to maintain the same risk on every trade (that's the constant risk part), then employ sound trade/money management to attempt to maximize his gains.

The Elements of Constant Risk Swing Trading

  • First, determine the amount of money that you are willing to risk losing on each trade if it does not work out. This is your Risk or R and is based upon your account size.
  • Select a trade candidate based upon support and resistance principles.
  • Decide what will be the stop loss price and what will trigger trade entry.
  • Use this information to determine the proper position size to in order to risk your standard R on every trade.
  • For the most part, consider only trades that offer potential for gain of more than three times the risk.
  • If your trigger conditions are met, take the trade with the appropriate position size.
  • Then vow that you will settle for no less than 2:1 reward/risk, in other words you will make that much or stop.
  • Move the stop with the trade as support & resistance levels allow.   The object is to trail the stop and let the market take you out.
  • After the stop has moved to break even or into profit and price has passed the 2:1 mark you may take partial profits near support or resistance.
  • NEVER knowingly hold a position through an earnings report release.
  • It is wise to trim positions/take partial profits before a news release that may shock the market - an FOMC report for example.   It is often wise to take partial profits before a weekend, especially a three day weekend or if there is an anticipated news event such as a possible hurricane strike.   A news shock can erode profits very quicky.

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Tu ne cede malis.

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Disclaimer: The information presented on this site is intended to be used for educational purposes only.   There is no guarantee of success represented or implied.   Each trader is responsible for his own trading decisions and the outcome thereof.   Close cover before striking.   Wait one hour before swimming.

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