Can bobbing and weaving like a boxer make you a better trader? With swing trading there are definitely lessons to be learned. Let's take Regeneron stock.
Our flexibility put us in enough of a defensive position that we could avoid a big hit if it came. At the same time, we stayed close enough to our target to get in some offensive strikes when the timing was right.
Adjusting Regeneron Position
While indexes showed a dramatic upside reversal on May 31, Regeneron Pharmaceuticals had its own upside reversal the day before (1).
It looked like the potential for rotation into biotech stocks and Regeneron was a strong contender. A couple of days later, we added it to SwingTrader as a half position (2). It was just shy of its buy point of a cup with handle but had an improving relative strength along with many group mates.
After making some progress, we saw a small pullback (3). Regeneron wasn't doing anything wrong. In fact it still closed above the 5-day moving average. But we faced a Fed announcement in a couple days. We decided to lock in some profit ahead of the volatility we've come to expect following Fed meetings.
Regeneron couldn't be stopped. It popped up the next day and we ended up adding back the position (4).
Selling Into Strength Can Help Manage Position
Regeneron kept rising on June 17. We decided to lock in some profits again (5). The stock still wasn't doing anything wrong. We saw other potential winners that looked worthy of positions but we were already fully invested. So, we took some off Regeneron as it got extended to give some other ideas a shot.
Technical Analysis: Why Mike Webster Focuses On Historical Downside Reversals.
A few days later and Regeneron pulled back again then reversed higher and closed near its highs for the day (6). This on a day where the market indexes were closing near their lows after showing downside reversal action. A number of positions we had didn't work out and were sold. But due to Regeneron's relative strength, we moved the money from the names that weren't working and grabbed our position back. Plus, the shares we added back were at a lower price than we sold.
When Regeneron made more progress from its upside reversal, we added to the position even more (7).
Our Final Exit In Regeneron Stock
After a couple days Regeneron started losing steam around 1,080. The day after a downside reversal, we started exiting the position (8). We still had gains from all of our adds and the weakness following the downside reversal was a chance to lock those gains down.
When the weakness continued the next day, we exited the remaining position (9).
It's a demonstration of the power of being flexible. We got defensive when Regeneron got extended to avoid taking a big hit. But we kept some of our position with the idea that we could add back shares if given the opportunity.
Of course boxers will tell you that bobbing and weaving requires extra stamina for all that movement. Traders would agree. In that regard, active swing trading isn't for everyone. But not taking big hits has its advantages. Shallower drawdowns while still maintaining solid returns makes swing trading a strategy worth considering.
More details on past trades are accessible to subscribers and trialists to SwingTrader. Free trials are available. Follow Nielsen on X, formerly known as Twitter, at @IBD_JNielsen.
