Applying The IRSTS Swing Trading Rules by Sylvain Vervoort
The Grand Finale!
Applying The IRSTS Swing Trading Rules
This seven-part series has thus far provided the components of
the indicator rules for a swing trading strategy (IRSTS), from
color-coding candlesticks to smoothing oscillators to creating
an expert system. Now that all of the components have been
detailed, here’s how you can put this swing trading strategy
to use in your trading.
In this seventh and final part of my series on indicator
rules for a swing trading strategy (IRSTS), I will
show you how you can apply the IRSTS rules to make
trading decisions. But before diving into it, I’ll first review
some general trading guidelines and principles.
General trading guidelines
1. Trading long and short: It’s as easy to trade a short position
as it is a long position. Trading long means buying a stock in anticipation of a price rise. You want to make a
profit when the stock price rises by selling it at a higher
price. When you trade a short position, you are essentially
selling a stock that you do not have in your possession. In
other words, you are borrowing the stock. You make money
when the stock price goes down by buying the stock back at
a lower price, closing the lending transaction. Please keep
in mind it is much more difficult to make money trading
short because while a stock can drop only 100%, there is
no limit to how far it can rise.
2. Spread the risk: Trading a single stock or bond of a
company is risky. If that company goes broke, all your
money is lost.
3. Compound profits: One of the most powerful moneymaking
tactics is compounding profits. This means that
you must reinvest at least part, if not all, of your profits
in upcoming trades.