Lance Breitstein Swing Trading Strategy
Trade with institutions — intermediate difficulty
📊 intermediate
📍 The strategies are applied primarily on the daily chart and suit liquid, high-at
Strategy Overview
Lance Breitstein's swing trading strategy involves two approaches: Mean Reversion/Capitulation Trading and Momentum Continuation/Breakout Trading. These strategies are applied to 'in-play' stocks, which are stocks with elevated volume, attention, and active price discovery. The strategies aim to capture multi-day to multi-week moves in these stocks.
Market Context — When This Strategy Works
The strategies are applied primarily on the daily chart and suit liquid, high-attention stocks. They are suitable for traders who can handle overnight gap risk and are looking for a more relaxed trading approach compared to day trading.
Introduction to Swing Trading
Swing trading involves holding positions longer than one trading session, typically days, weeks, or months. The primary decision-making timeframe is the daily chart, and entries and exits must be calibrated to the daily chart's structure.
- Screen time is reduced compared to day trading
- Decision frequency is lower, with 1-2 major decisions per day
- Scalability is near-infinite, with less slippage
The In-Play Stock Filter
Before applying either strategy, every trade candidate must be an 'in-play' stock. In-play stocks offer tighter bid/ask spreads, a higher probability of directional price movement, and simultaneous participation from institutional and retail traders.
- Elevated volume and attention
- Active price discovery
- Recent catalyst such as an earnings surprise or sector rotation
Strategy 1: Mean Reversion/Capitulation Trading
This strategy bets that a stock that has moved sharply and rapidly in one direction has exhausted its pool of motivated sellers. The underlying logic is emotional exhaustion, where fear and greed accelerate price too far too fast.
- Sharp, extended, accelerating decline
- High or extreme volume during the decline
- Unsustainable rate of change
Strategy 2: Momentum Continuation/Breakout Trading
This strategy bets with a powerful trend, specifically buying breakouts in stocks that have already demonstrated institutional demand and are part of a theme or narrative that large money managers need exposure to.
- Stock must be in a hot theme or sector
- Catalyst such as an earnings surprise or sector rotation
- Multi-month breakout on elevated volume
Risk Management Framework
The universal sizing rule governs both strategies, where position size is determined by the account risk amount per trade divided by the stop distance per share. Stop-loss architecture includes initial, trailing, and absolute stops.
- Position size must be adjusted based on stop distance
- Trailing stops can be used to lock in gains
- Absolute stops can be used to exit a trade if the thesis is invalidated
Entry Rules
- Wait for capitulation signals in Mean Reversion/Capitulation Trading
- Look for climactic volume and acceleration at an unsustainable rate of change
- Enter after price breaks above prior bar highs in Mean Reversion/Capitulation Trading
- Identify a major multi-month breakout in Momentum Continuation/Breakout Trading
- Look for a catalyst and orderly consolidation in Momentum Continuation/Breakout Trading
- Enter at or near the breakout resistance level in Momentum Continuation/Breakout Trading
Exit Rules
- Scale out of the trade when it is moving in your favor
- Trail the remaining position with prior daily bar lows
- Stop-loss trigger is a daily close or intraday breach below the prior daily bar low
- Exit immediately if the breakout level is closed back below
- Trail with the 20-day MA as a loose stop
Risk Management
- Position size must be adjusted based on stop distance
- Use a universal sizing rule to determine position size
- Initial stops can be used for immediate post-entry protection
- Trailing stops can be used to lock in gains
- Absolute stops can be used to exit a trade if the thesis is invalidated
Key ICT Concepts Used
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