Swing trading has made many a hedge fund manager a fortune - including the world's most successful investor. But it can work for small investors too.
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The World's Most Successful Investor Is a Swing Trader
Nicholas Vardy, Quantitative Strategist, The Oxford Club
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Swing trading has made many a hedge fund manager a fortune - including the world's most successful investor.
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Today, Nicholas Vardy shares how this man built his fortune and how swing trading can work for small investors too.
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Editor's Note: Yesterday, Nicholas Vardy explained what swing trading is and how it works. Today, he's going one step further and sharing concrete examples of how the world's most successful investor used swing trading to build his fortune.
And - finally - Nicholas is going to break his silence as a former hedge fund manager and reveal the secrets behind his new Oxford Swing Trader system. It's all happening TODAY at 1:00 p.m. ET during his [Swing Trader Summit](. Trust me, you don't want to miss what he has to say! Just [click here]( to register.
- Christina Grieves, Senior Managing Editor
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[Nicholas Vardy] Â
[Yesterday](, I revealed how billionaire Paul Tudor Jones II made his fortune by swing trading.
[Swing trading techniques]( helped Tudor Jones build his hedge fund from a tiny $30,000 startup to a $7.8 billion leader in the industry.
But Tudor Jones isn't alone.
I've also written about the world's greatest investor, mathematics professor [Jim Simons](, who founded Renaissance Technologies in 1982.
Since 1988, Simons' Medallion Fund has generated average annual returns of 66% before fees.
Bloomberg has called Simon's quant system "a money printing press."
But Simons experienced extraordinary success only after he began to focus on identifying reliable and repeatable short-term patterns in the market in 1990.
Today, Simons works with an army of rocket scientists who spend their lives mining reams of data going back to the 1700s to pick stocks.
For Warren Buffett, the ideal holding period for an investment is "forever."
For the Medallion Fund, the average holding period is two days.
The surprising conclusion?
Simons, the most successful investor in history, is a [swing trader](.
What a Successful Swing Trade Looks Like
Let's look at some examples of the kinds of successful swing trades that made Simons a billionaire.
Take a look at the candlestick stock chart below.
As I've discussed before, candlesticks offer a wealth of information on where a stock is headed next.
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 Remember, what swing traders are looking for is streaks. They want to identify periods where every day is the same color.
So you see a stock go red, red, red many days in a row because traders are trading in lockstep... pushing the stock down... But then the reversal happens.
All it takes is one upward swing, and suddenly the machines have completely altered course.
They swing back to buying instead of selling.
When this happens, the days afterward all go green.
Let's look at another example.
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You can clearly see here that this stock suffered several big consecutive down days.
The candlestick chart shows successive bars of red.
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 But then the stock reverses.
You see the reversal with the first green bar. And then you see the swing higher.
On this swing trade, you could've made 125% in nine days.
Here's another example...
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[Swing Trade]
 You see a drop of six consecutive days. Then you have a reversal day, followed by the inevitable swing upward.
This single trade would've made 104% in under a week
In all these examples, you are seeing algorithmic trading in action.
Again, the quant algorithms are programmed to pick up similar patterns.
They often operate in lockstep. So when one trading system is selling, most of the others are too.
Then, as the sentiment swings in a positive direction, the same stocks rebound, almost as predictably as day follows night.
I use sophisticated software similar to what the biggest hedge funds use.
If my computers switch to buying from selling, it is very likely that the other computers are doing the exact same thing.
Once you know what to look for, it becomes straightforward to predict these movements.
All this is invisible to most investors. But computers programmed with the right algorithm can recognize these patterns in milliseconds.
Two More Edges to Swing Trading
Previously, I've discussed why swing trading offers you several edges over other forms of trading. Here are two more advantages...
First, swing trading removes human emotion from trading.
The human mind was not designed for trading. Humans are driven by emotions that can change on a whim.
In contrast, machines are completely predictable. Program a computer with an algorithm, and it will make the exact same decisions every time.
The good news is these algorithms have made Wall Street trading far more predictable than ever before. After Wall Street's quant algorithms push a stock lower, it's all but inevitable you'll see a swing higher as those same computers push it higher.
It's like Isaac Newton's third law: For every action, there is an equal and opposite reaction.
Second, swing trading works in any market. Up. Down. Sideways.
I don't worry about what the overall market is doing. Instead I stay completely focused on the swings of individual stock prices.
Introducing Oxford Swing Trader
With my new trading service Oxford Swing Trader, I've developed an algorithmic trading system that searches 4,000-plus stocks.
It identifies companies whose candlestick charts look much like the examples above. It then further narrows this handful of companies through swing trading algorithms similar to the ones used by some of the world's top hedge funds.
I will only be sharing these ultra-specific, highly targeted recommendations with my subscribers.
Today at 1:00 p.m., I'll be revealing more details behind the Oxford Swing Trader system in my live [Swing Trader Summit](.
The summit is completely free to join - just sign up [here](.
Good investing,
Nicholas
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About Nicholas Â
Nicholas Vardy is the Quantitative Strategist of The Oxford Club, head of Oxford Wealth Accelerator, and contributor to Liberty Through Wealth and [The Oxford Communiqué](. He is a widely recognized expert on quantitative investing, global investing and exchange-traded funds whose work has been cited in a variety of publications, including The Wall Street Journal and Financial Times. He holds a B.A. and M.A. from Stanford University and a J.D. from Harvard Law School. He is also an associate of the Adam Smith Institute and the Chatham House think tank in London.
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