Notes and highlights for The 5 Secrets To Highly Pro Trading able Swing Introduction - Why So Many Pros Swing Trade Highlight (pink) - Page 6 - Location 38 Stocks move in 5% to 30% momentum bursts that last between 2 and 10 days , before they mean - revert or go into sideways consolidation . Highlight (orange) - Page 6 « Location 39 ‘The goal of every swing trader is to capture a portion of a short - term momentum burst , while avoiding consolidation periods . Then to repeat the same process hundreds of times in the year by risking between 0.5 % and 1 % of capital per idea Chapter 1. The Perfect Setup - What and When To Buy Highlight (pink) - Page 9 - Location 74 There’s an unwritten market rule called the 80 / 20 . Many stocks have 80 % of their appreciation in just 20 % of the days . The rest of the time they spend in sideways consolidation . A swing trading approach aims to put us in stocks during their range expansion period . Highlight (orange) - Page 9 - Location 77 Swing trading is about taking advantage of market structure - range contraction is often followed by range expansion ; consolidations tend to continue in the direction of the established trend . Highlight (pinks) - Page 9 - Location 79 A great risk - to - reward swing setup has several factors going for it and they are all price related : Highlight (orange) - Page 9 - Location 80 1 . Previous uptrend . 2. Near 10 - day high ( within 3 % of it) . 3 . High relative strength on weekly , monthly , quarterly or half year basis . 4 . Tight side - ways consolidation on below average volume , lasting anywhere between 2 and 20 trading days . 5 . The closing prices of the past fow trading days are very near to cach otherHighlight (orange) - Page 16 - Location 85 6 . Stock is coiled near its 5 , 10 or 20 ~ day moving average . 7 . Stock is trading above its 5 - day moving average . 8 . Stock’s 5 - day moving average is above its 20 - day moving average . Highlight (orange) - Page 16 - Location 102 The Psychology behind this setup Financial markets move in cycles that are defined by institutional moves . Highlight (yellow) - Page 17 - Location 104 When institutions buy or sell , they do so in volume and leave clear traces for the experienced eye . Highlight (orange) - Page 18 - Location 116 § Stocks up > 10 % in the past week ; § Stocks up > 20 % in the past month ( use > 10% if you are looking for large caps ) ; § Stocks up > 30 % in the past quarter ( use > 20 % if you are looking for large caps ) ; § Stocks up > 40 % in the past 6 months (use 30 % if you are looking for large caps ) Highlight (orange) - Page 26 - Location 149 Stocks move in a constant cycle of range expansion and range contraction . Buying a breakout in a perfect setup aims to put us in stocks that are entering into range expansion mode . What are the characteristics of a great breakout setup : § Low - volume range contraction ( 2 to 20 days ) § Up from the open > 2% § Daily change > 2 % § New 10- day high § 5 - day moving average > 20 - day moving average § Price is above its 5 - day moving average § Average daily volume > 50k § Relative volume > 1 Highlight (ors ge) - Page 26 - Location 157 § Price > 2 § Stop is the lows of the 2 % breakout day Highlight (pink) - Page 27 » Location 170 A2% gain from the open to a new 10 - day high is a significant move when it comes from an area of low - volume consolidation . Many range expansion trends begin with it Highlight (orange) - Page 27 « Location 172 Another version of the breakout setup is to use 4 % move without the 10 - day high requirement . 4 % is a significant move for most stocks priced above $ 10 . Here we are looking to buy the low - volume pullback of a stock with established price momentum . A 4 % move could be this signal Highlight (orange) - Page 32 Location 224 § If there is no range contraction , don’t buy ; § If'a stock is already up 3 - 4 days in a row , don’t buyChapter 2. When To Sell Highlight (pink) - Page 40 - Location 290 Most stocks move in momentum bursts of 2 to 10 days . Then they enter into trendless consolidation through time or mean - revert