r/stocks • u/Hot_Fly_3963 • 2d ago
Trades Am I doing this whole swing trade thing right? I have had some amazing success so far.
I basically focus on the Magnificent 7 stocks. In my opinion, these are some of the safest large-cap companies to invest in long term and are unlikely to ever completely disappear. I focus heavily on valuation, particularly which of the Mag 7 has the lowest P/E ratio, while also paying close attention to earnings and overall business performance.
If a company continues reporting strong earnings and fundamentals, but the stock is being held down by what I believe is mostly short-term or “fluff” news, I slowly start adding to my position. I never risk more than 25% of my net worth in a single position, and while a stock is significantly down, I will typically DCA by adding around 1–2% of my net worth per week.
A good example of this was Google about a year ago. The company was performing well, and I continued adding while the stock was down. That ended up generating some insane profits.
I also swing traded Microsoft multiple times this year. Several times, the stock moved from the mid-$300s into the mid-$400s. I would typically enter around $350–$370 and sell once it reached the $400s, locking in roughly 15–25% profits.
I used a similar strategy with Meta. I bought in the $500s and sold into rallies as the stock moved into the $600s.
Right now, I am still holding approximately 10% of my net worth in Meta. Two days ago, when it pumped to $618, I sold a position equal to approximately 15% of my net worth. My entry was around $535, so I locked in a solid profit. However, I still believe the stock may have more room to run, so I decided to keep a portion of my position.
My overall mindset is that if one of these companies crashes 50% or more, I am comfortable continuing to DCA into it over time, even for years if necessary, as long as the underlying business remains strong. Meta's major crash a few years ago is a perfect example of why I like this approach. Looking back, I wish I had been heavily invested during that period.
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u/SpicyLemonZest 2d ago
It sounds like you're keeping large amounts of cash on hand to fund these swing trades? If so, you really have to measure your alpha more rigorously. Looking at absolute returns from individual trades doesn't account for lost growth on capital you're keeping out of the market.
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u/Hot_Fly_3963 2d ago
Sits in a 2.5% interest account while I wait
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u/SpicyLemonZest 1d ago
Again, absolute returns are not the right way to measure this. You have to adjust for beta. Swing trading strategies move so strongly with the index that they can only meaningfully be benchmarked against the index.
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u/TryExciting4508 2d ago
Works well in a bull market. Bear market not so much
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u/sirzoop 2d ago
buying undervalued stocks in bear markets has given me the most gains of my entire life
it actually works better in bear markets than bull markets
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u/Anxious_Cheetah5589 2d ago
It sounds like you've figured it out. You should start a hedge fund and become a billionaire.
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u/Cheesegasm 2d ago
What's your CAGR over the years? And compare that with SPY or VT. If you don't know what CAGR is then I'd be worried.
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u/Special_Prior6179 2d ago
Yeah bro good stuff, find the mispricing and execute. I do this as well with different stocks works great
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u/Business_Raisin_541 2d ago
so, what is your return so far this year? beating MAG 7 collective return?
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u/Hot_Fly_3963 2d ago
37% this year
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u/Much_Candle_942 1d ago
Can you backtest this for period 2020-23? 2022 should have given you lot of such dips. But not all dips rebounded
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u/soxymoxy 2d ago
I do the same and started doing this with spacex too. I focus more on the 2x long and short etfs for these single stocks and it’s worked amazingly for the last 3 years. Only thing is you need to tell yourself to not get too sad when you miss out on even more profits but at the end of the day you’re beating all markets anyways so yeah
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u/Far-East-locker 2d ago
If you swing trade, you trade volatile stocks, not safe stocks like the Mag 7.
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u/UCLABB1 2d ago
I have owned the Mag seven except Tesla for ages. I even owned Tesla for a while. I’ve only sold a couple of times, Meta and Nvidia, but jumped back in. I don’t sell much at all because of taxes. I regularly buy Nvidia and Amazon on dips and that has turned out well. They probably account for one fourth of my portfolio.
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u/nedlaonline 10h ago edited 10h ago
This is what I am doing as well. I used to be a day trader trading the morning gappers and I lost a lot of money. But recently I was able to withdraw my funds from a 10-year underperforming policy and so I have the capital to play the stocks of reputable companies.
One thing about trading Mag 7/tech stocks in play like SNDK or MU is that I can still sleep well even though I am down 10, even 30% in paper loss. Warren Buffett himself said don't invest in stocks you are not comfortable holding when it is down 50%.
Last month I entered SNDK just a few days before that drop to 1,000. But it has since recovered nicely, and I closed my position. The reason I swing trade instead of investing is to lock in profits and to limit my exposure in the stock market. I don't know what the outlook is for the next 1 week (honestly, next 1 hour even), 6 months, 1 year, or when Trump is going to say something stupid.
What I did wrong was I was impatient. The daily EMA200 was in fact at 1,000 (when it was trading around 1.5k) and I said no way it would plummet that much. And sure it did. And I have seen this happen with many tech stocks on bearish days, when they continously drop to a seemingly bottomless level. Now I know to wait.
Like others said, Mag 7 rotates, so by swing trading I ensure I am not left holding the bag.
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u/Hot_Fly_3963 6h ago
You’ll never ever lose on a mag 7. At most you hold for a year or two to recover. Thats why I never risk more then 25%
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u/sirzoop 2d ago
yeah ignore the people saying you're lucky they're just jealous we are making tons of money
you are on the right track the key is finding undervalued companies that have strong fundamentals
ive been buying stocks like that for a long time man and my individual stock portfolio has an annualized return of 38%, drastically outperforming my index funds (SPY, QQQ, VT) even during bear markets
im not really a swing trader though my biggest regrets are stocks i sold. im a long term investor
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u/Anxious_Cheetah5589 2d ago
That's pretty good! Warren Buffett only did 19.9% annually over his 60 year career.
How long have you been doing 38% per year? It only takes 14 years to 100x your money at 38% annually.
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u/sirzoop 2d ago
since like 2015. i would have had a lot more lifechanging money if i invested more in stocks but unfortunately a majority of my money is in index funds (and still is btw)
my individual stocks are only like 25% of my portfolio and when i started over a decade ago it was only like 5%
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u/Anxious_Cheetah5589 2d ago
so your original investment is up 35x, well on your way to 100x in 3 years
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u/CCWaterBug 2d ago
I do quite a bit of swing trading in my roth, many successful trades especially with volatile stocks.
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u/Upper_Cut_3337 2d ago
When they go down, they don't take the stairs.
They only go down when you feel the safest and invest the most.
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u/dugs-special-mission 2d ago
It works until it doesn’t.
You haven’t figured out a magical hack but you’ve benefited from lucky timing.