Swing Trading Playbook

Holding Period: 2 days to several weeks · Capture a defined leg within an established trend or breakout from consolidation

1. Core Entry Criteria

Trend alignment on the daily chart: Price trading above the rising 20-day and 50-day SMAs, with the 50-day above the 200-day (stage 2 uptrend per Weinstein/Minervini framework).
Identifiable base or consolidation structure: Flat base (≥5 weeks, ≤15% depth), cup-and-handle, flag, pennant, ascending triangle, or VCP with progressively tighter price ranges.
Pullback to a defined support zone: Rising 10/20-day EMA, prior breakout level, 38.2%–50% Fibonacci retracement, or horizontal support formed by prior swing highs.
Breakout from a pivot point: Price clearing well-defined resistance with contraction in the days immediately preceding.
Relative strength ≥ 80 (IBD RS Rating or equivalent) versus the broader index over 3–6 months.
Fundamental catalyst or tailwind: Strong recent earnings (EPS growth ≥25% YoY), sector rotation, upgraded guidance, or secular thematic exposure.
Liquidity floor: Average daily dollar volume exceeding $20M for orderly fills and stop execution.

2. Market Context

Works best when: Broad market in confirmed uptrend above 50-day MA. Market breadth expanding. VIX stable or declining (12–20). Stock's sector outperforming the index on 1-month and 3-month basis.

Avoid when: Major indexes in confirmed downtrends or under distribution. Correlations across sectors spiking toward 1.0. Immediately before FOMC, CPI, or the stock's own earnings date if holding period overlaps.

3. Confirmation Signals

Volume expansion ≥ 1.5× the 50-day average on the breakout or reversal day.
Closing range in the upper third of the day's bar — buyers controlled the session.
Follow-through day within 1–3 sessions: a second up-day on rising volume confirming institutional demand.
No immediate reversal below the pivot: price holds above the breakout level on any subsequent pullback.
Relative strength line making new highs ahead of price — a hallmark of leadership.

4. Risk Framing at Entry

Risk defined as the distance from entry to the invalidation level — typically the low of the base, breakout day low, or logical swing low.
Position sizing calibrated so stop-loss distance = 0.5%–1.0% of account equity per trade.
Reward-to-risk expectation at entry should be ≥ 2.5:1 based on measured move or prior swing structure.
Stops placed at structural levels, not arbitrary percentages — avoids being shaken out by noise while still invalidating the thesis when broken.

5. Institutional Perspective

Why this works: Institutions accumulate at well-defined technical pivots because these levels coincide with where systematic trend-followers, CTAs, and quantitative momentum funds deploy capital. The inefficiency exploited is gradual information dissemination — fundamental improvements take weeks to be fully priced in as analysts upgrade and passive flows rebalance.

Base breakouts serve as coordination points where large allocators scale into positions with reduced slippage.
Persistent relative strength reflects sticky institutional ownership accumulated over prior quarters, creating price support on pullbacks.

6. Common Entry Mistakes

Chasing extended setups: entering when price is already >5% above the pivot, eliminating favorable risk-reward.
Buying wide, loose, or "V-shaped" bases that lack genuine consolidation and institutional absorption.
Ignoring the general market: taking swing longs during confirmed market corrections regardless of individual setup quality.
Weak-volume breakouts that indicate lack of institutional demand and typically fail within days.
Confusing news-driven gaps with swing entries: episodic pivots operate under a different framework.
Over-reliance on indicators (RSI, MACD) without price-structure confirmation.