Short term: swing trades over days to weeks

A swing trade holds for a few days to a few weeks. The goal is one leg of a move, a single stretch up, inside a trend that already exists. You are not predicting a turn. You are joining one that has started.

The setup

Trend first. Price above a rising 50-day average, the average closing price of the last 50 trading days. If the 50-day is flat or falling, skip it. Most failed swing trades are pullbacks in a downtrend that looked cheap.

Then the pullback. A 3 to 8% dip toward the 20-day average, on lighter volume than the rally before it. Volume is the number of shares traded. Light volume on the way down suggests sellers are tired, not panicking.

Then the turn. Wait for a day that closes above the prior day's high. Buying before the turn is guessing. Buying after it costs a little more and removes a lot of bad trades.

Exits, set before the entry

Put the stop just under the pullback low. Put the target at the prior swing high, the peak before the pullback began. If the target is not at least twice as far away as the stop, the winners will not pay for the losers. That ratio is called reward to risk, and it is the "Reward vs risk" line on every stock ticket in the feed.

Example: a stock is at $102 after pulling back from $110, and the pullback low is $98. Stop at $97.50, so the risk is $4.50 a share. Target $110, so the reward is $8. Reward to risk is $8 divided by $4.50, about 1.8. That is close but below 2. Either wait for a better entry or pass.

Size from the stop

When a setup does pass the test, size it from the stop, not from how sure you feel. On a $10,000 account risking 1%, the most you plan to lose is $100. If the stop is $3 below your entry, $100 divided by $3 is 33 shares, rounded down. A stop is a plan, not a promise. A stock can open below it after bad news, so a swing trade can still lose more than you planned.

Earnings

Know the earnings date before you enter. Companies report results four times a year, and the stock can open far higher or lower the next morning. A swing trade held through earnings is a coin flip on that gap, and a gap can jump right past your stop. Every ticket shows the next earnings date and flags it when it falls inside an option's expiry.

Try this

Add three stocks trading above a rising 50-day average to a watchlist. When one pulls back 3 to 8%, write down the pullback low, a stop just under it, and the prior high as the target. Work out reward to risk. Paper trade only the ones at 2 or better, then check back in two weeks and note what happened.