Swing Trading Stocks Trade Management

9. Juli 2020

This is a Long Swing Trade I have open using the Elliott Wave Indicator from W5T on the TradingView Platform.

The setup and entry for this 5th wave trade was text book in that:

1. The Elliott Wave Oscillator pulled back between 90% and 140% during the 4th wave profit taking pullback
2. The False break out stochastic crossed over in the over sold zone during the 4th wave profit taking pull back against the yellow false breakout bar in the over bought zone during the 3rd wave.
3. The Wave 4 profit taking pullback found support in the amber zone of our automated pullback zones, which represents an 80% probability of our automated 5th wave target zone (in blue on the chart) being reached.
4. The Risk to Reward was over our minimum required 1:1.6 - This include sensible entry and stop loss strategy - This can be seen on the chart.

To manage this trade is pretty straight forward:

The point of control for us is the price closing above the 50% Reward line (cyan on the fib extension on the chart). Then we move our stop just above the entry to make the trade "Risk Free"

Then we Trailing the Stop "Two Candle Behind". So as Yesterday's candle closed above the 100% profit line (yellow fib extension on chart), I adjusted the stop just below the low of the 2nd candle back. In this case locking in 50% profit x Risk. So if you Risked $10,000 on this trade, you would have $5000 profit locked in!

We are at a critical point in this current trend as we will be testing the previous wave 3 high and in some market conditions, this is too much and the price turns back down and corrects. This is why we lock in profit. However we have an 80% probability of the price pushing through and reaching our 5th wave target zone and will continue to manage this trade with our "2 candles behind" trade management strategy into the 5th wave target zone, if the price breaks through the previous wave 3 high!