Example Trade 1: Electronic Arts (ERTS)

The most requested thing that I get through my email is "Can you provide more trading examples?". Yes, I can! Here is an example of shorting a stock using the Traders Action Zone strategy (TAZ).
On June 15, the market was overbought. This means that I will be putting all my efforts into short setups.
Take a look at the following chart:
The 10 SMA is below the 30 EMA and Williams %R is overbought (higher than -20). That tells me that the market has a higher than average probability of falling. So, it is time to look for short setups.
I run a TAZ scan near the end of the trading day and I find ERTS:
This stock has rallied up into the Traders Action Zone and has formed a bearish engulfing pattern. Nice. But first I want to look at the hourly chart. And here it is:
The arrow is where I shorted it. But, the important thing on this chart is the area that I circled. That consolidation is what is going to protect me from a loss (my stop will go above that.) It would be very difficult for traders to move the price above that resistance level. Why? Because prior to that consolidation was a huge run-up. So, the traders that were long during that run-up are now faced with an important decision.
Should I sell?
And the answer is yes! They should sell because the previous momentum has stalled. So, this selling pressure is what moves the trade in my favor.
So, that is why I shorted ERTS. Swing trades don't always work out this well but many of them do.
You could make swing trading more difficult that this. But why?

Example Trade 2: Career Education (CECO)

Here is another example trade using the Traders Action Zone strategy. This trade did not go in my favor, which is why money management is so important to swing trading.
Here is a swing trade that did not go in my favor.
This is how it unfolded...
On July 12th the S&P 500 was overbought:
After running a scan near the end of the day, I came up with Career Education Corp (CECO). What a beautiful chart this was! Take a look:
CECO was up against resistance and an upper trend line. Then it formed a bearish candle after four consecutive up days. And, it was reversing near the 50 percent retracement level. Plus, it had relative weakness compared to the S&P 500. Not only that, but the hourly chart was perfect!
Here it is:
There is a double top chart pattern at $25. This was an ideal stop loss area. If this stock moved above this area then the trade would be invalid. So, I shorted CECO near the end of the day.
This stock had everything going for it. And, it was a perfect set up. But, trades don't always go in your favor - no matter how good the set up looks. Here is what happened:
This stock moved above the double top ($25). There is always an area on a stock chart that invalidates the set up. In this case, that area was the double top chart pattern.
So, I got stopped out for a loss.
There are three things I know about swing trading and the stock market:

1. You are doomed without a money management strategy.
2. Chart patterns can and will fail no matter how good they look
3. There will ALWAYS be losing trades.

That knowledge is what has kept me in this game for so long.

 

Example Trade 3: Noble Energy (NE)

Here is another example trade using the Traders Action Zone strategy. This stock got me real excited because it was easy to define my risk.
Here is a stock that got me real excited.
I'll show you why in a minute.
On June 21st, the market was coming out of overbought conditions. Take a look at the following chart:
On an intra day basis, the S&P 500 was overbought. But, by the end of the day, the market tanked moving Williams %R out of overbought conditions. That is fine. By looking at price action you can tell that this chart is bearish. The bearish engulfing candlestick pattern is a dead giveaway.
I ran a TAZ scan near the end of the trading day and I found NE:
Noble Energy has formed a dark cloud cover candlestick pattern. But, do you see what go me excited about this chart? Take a look at the hourly chart:
The arrow is where I shorted this stock and that double top is what is going to protect me from a loss (my stop loss will be above that). Now look back up at the daily chart. Do you see the double top now? Look for that when you are sifting through potential setups.
This is how the trade unfolded on the daily chart:
This was an easy swing trade for me. It was easy because my initial risk was so easily defined. If this stock did move above that double top, then the trade would be considered invalid.
And I would have taken the loss

Example Trade 4: Zagg, Inc. (ZAGG)

This is the fourth example trade using the Traders Action Zone strategy. It was also one of my best trades of the year!
This is a stock trade that I took even though market conditions were less than ideal. It is also a good example of a "first pullback" trade scenario.
It ended up being one of my best trades because I made a lot of money in a short amount of time!
On June 9th, the market was coming out of oversold conditions. Take a look at the following chart:
There is one thing on this chart that should immediately pop out at you. The 10 period moving average is below the 30 period moving average. So, we should be focusing on short setups, right? That's true but when the market is deeply oversold like it was in this case, then I might run my scans just to see if there are any decent trades on the long side because I know that the market has high probability of a bounce.
And it's a good thing that I ran my scans because I came up with this gem...
ZAGG Inc. has recently broken out through a significant resistance area (about $10.50, the black line) and it has now pulled back to that resistance area which has now become a support area (remember that previous resistance often becomes the new support).
Also, look at those two charts again. The S&P is moving down and ZAGG is moving up. This means that ZAGG has relative strength compared to the market. It's a strong stock!
But, the big question is this: How can I buy this stock with the least possible risk to my trading capital? That should be the first question you should ask on every trade!
So, once again, we return to our best friend: the hourly chart...
Do you see it? This stock has formed a near perfect double bottom and has just broken out! What is so significant about this is that I can easily define my risk ahead of time. I can buy this stock and put my stop under the low of the double bottom. That double bottom is what will protect me from a loss.
So, I bought the stock right on the breakout near $10.60.
This is how the trade unfolded on the daily chart:
The circled area is where I bought the stock and the arrow is the day that I sold the stock. You are probably wondering, "How did you know to sell it right before it fell?". The answer is simple: because it gapped up. When a stock gaps up like that after an already extended move to the upside, then you can safely bet that it will fall because this is a gap caused by amateur traders.
These traders are almost always wrong.
So it always makes sense to bet against them!