Swing Trading & Swamp Land in Florida Have Much in Common

A recent dialogue on my Facebook about the definition and merits of “swing trading”:

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Friend 1: Swing trade – what the [blank] is that?

Friend 1: I’ve seen it in late night [infomercials] like seminar offers.

Friend 2: Just a term to describe length of trades…usually a few weeks to a few months. Don’t daytrade and in this environment can’t put on long term positions. or postional trading…

Michael Covel: I have never seen a pro track record defined as swing trade … just saying. It’s a term with no universal meaning.

Friend 2: C’mon guy’s you can’t be serious. Here is the defintion from Wikpedia.

Michael Covel: How about (1) audited track record from one pro trader that shows ‘swing trading’? Let’s say you want to write book titled ‘Swing Trading’ and you want the foundation to be performance track records of pro traders who practice it … where are they? My book ‘Trend Following’ only exists because of those track records.

Friend 1: Swing trading sounds like Wade Cook.

Friend 2: Really don’t care about “pro traders” or if you have written a book….in order to make money now have to be nimble enough to trade “the swings” in the market. Especially when using 3X leverage…call it what ever you want don’t care. Stupid issue to even be discussing. You both know can’t buy and hold in this market have to trade it. Whether you trade intraday or try to time short term “swings” in the market that is where it is at right now. I’m out see yah…

Friend 1: Well. Pout pout…hrumff.

Friend 2: Not impressed with either of you guys. Seen your type before. Think you know it all and unwilling to learn from others. Have a saying “pride goeth before the fall.” Don’t like people with an ego. Last time I am going to post here.

Michael Covel: …are you serious? I put you on the spot and you bail? I am more than willing to consider strategies … it’s just that little thing called “trust, but verify!”

18 thoughts on “Swing Trading & Swamp Land in Florida Have Much in Common

  1. hey michael,

    gotta admit i have been trading like a wimp. but right now the stock market is just weird. it goes doooowwwn then uuuuuup. with this market behavior i guess i have no choice but take some profits early. not to say that i am not gonna follow the trend in the future. i am looking forward for that big move down breaking dow 9k and hoping it comes soon so i can trend follow that.

    trend following is the only strategy that really makes sense to me especially the money management part.

    thanks.

  2. just 12 trades per year average?

    * All entries are at the close.
    * All exits are either at the close or the open.
    * Averages about 1 trade per month – not labor intensive.
    * Average trade lasts 7 trading days.
    * Uses a few simple indicators.

    sounds to good to be true.

  3. I should add to the above that he uses the term “trend” but he is, by definition, swing trading.

    One could argue that even a day trader is a trend trader I guess…depends on your time frame.

    Semantics.

  4. I agree with Nick Radge. There is a difference between long-term trend following and trading with the trend in various time frames, but the latter can also be called ‘trend following’. I trade foreign exchange with a clear set of rules and only in the direction of the long-term trend. However, instead of holding a core position for the entire move, I typically only hold a position a few days and average up with the move with many small positions. I take advantage of many micro trends within the overall major trend. I still consider myself a trend follower since I trade with the trend and never try to predict what the market is going to do.

    Swing trading is not trend following if one is trying to time the markets. However, one can be a trend follower on any time frame as long as price dictates the course of action and one is reacting instead of predicting.

  5. Come on Michael. Paul Tudor Jones defines himself as a swing trader. These arguments over semantics drive me crazy. I thought you were boys with Sykes. What do you define him as? Is Marty Schwartz a long term trend follower?

    FWIW, Karina Jett is terrible at poker. She must be playing in really soft live cash games to not be homeless. Also, to Carlos, it makes a lot more sense to have poker celebrities in a movie than poker players like Brian Townsend or Phil Galfond.

  6. mark,

    errr… but what do poker “celebrities” know… the poker players you mentioned together with tom dwan and “celebrities” patrik antonius and phil ivey would have better insights on money swings and variance and how to think about the game as they are, by far, the best thinkers of the game right now in both online and live poker. most poker players we see on tv are just… lol.

    michael and tim sykes are buddies? cool! i love that guy. tho i think his (tim sykes) style is a little scary cos i don’t understand any of it. but overall i like his take on the fraud behind penny stocks. i wish i could be good as him in gathering and interpreting info and use that in my trading.

  7. Please post PTJ performance. Month by month? Doubt that is happening. He is like Bacon, etc. Large and diverse investing approach compared to when he first started and extremely reclusive compared to the performance reporting of trend CTAs. But at the end of the day no large fund makes big bucks unless they are following the trend — marketing hype be damned.

  8. but right now the stock market is just weird. it goes doooowwwn then uuuuuup.

    carlos if you think that is weird then you could please let us know of one time period in the entire history of the market where it didn’t go down and up? Thanks 🙂

  9. mike,

    oh for sure. i just think it would be interesting what insights we can get from the players i mentioned as they are the guys at the top of the poker food chain.

  10. Wade Cook!!!???
    He’s the one that got me into this who thing back in the good old 90’s when he used to come out on the local business channel on UHF.
    One of the hosts was Laura something and they used to do alot of interviews with Arch Crawford and many others whose names escape me at this time.

  11. Hey Andrew Adams, are you the person on bloomberg who works at Capula Investments in London? Thanks, Andrew.

  12. “I am looking forward for that big move down breaking dow 9k and hoping it comes soon so i can trend follow that.”

    This, to me, is not trend following. What are the markets doing right now? If they are whipsawing you then that is what they are doing, right now. Taking profits early, trying to “improve” the trend following model will just about ensure that if a big move down does come you will have optimized your way out of it. If the markets are whipsawing it is better to accept and understand how you feel about that than project forward into some future time of bliss when you imagine that the market will be trending down and you will be making a killing.

    If trend following is uncomfortable, I’d say it’s better to learn to be uncomfortable than to try and make trend following more comfortable.

    As Mark Douglas said, market information carries no emotion with it, only what we project onto it.

    Just thoughts on your thoughts. Thanks for the post.

  13. Swing Trading refers to a time frame of trading, not a style. Three major time frame categories are Day Trading, Swing Trading, Position Trading. These should not be confused with arbitrage, trend trading, trading on fundamentals, and other styles. If one’s system defines the trend, buys strength and sells weakness, and does so for an average holding period of one month, he is a Trend Following Swing Trader. The shorter the time frame the more slippage and commissions eat into profits. There also seems to be more relative noise on shorter time frames.

  14. Swing trading is trend following at its purest. It refers to moving in and out of a market in time frames too short for fundamental information, such as earnings reports or government data releases, to be meaningful. If you insist on finding a successful trader who says, “I am a swing trader”, you may have a problem, because the term is relatively new. (I suspect that it was invented by someone with a book to sell.) If you look past the term and look at what swing traders really do, you will see that it is what most of the successful locals have been doing in the futures markets, here in Chicago, for over 150 years.

  15. I think you guys are maybe trying to say – “momentum”. And momentum is already implied in the very notion of trend following.

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