Two entry methods for swing trading strategy

“ Heavy positioning techniques are hard to master without years of trading experience.”

Today, the three major Hong Kong stock indices collectively closed higher. Driven by large financial stocks, the indices rose by over 1.5% in the morning session before pulling back in the afternoon.

At the close, $Hang Seng Index(HSI.HK) rose 0.82%, while $Hang Seng China Enterprises Index(HSCEI.HK) and $Hang Seng TECH Index(HSTECH.HK) gained 0.94% and 0.5%, respectively.

Financial Mom has a unique trait: when she’s interested in a strategy, she doesn’t listen to those who haven’t succeeded.

Instead, she prefers to learn from those who have achieved success, especially the top performers.

After becoming interested in swing trading strategies, she wanted to find a top-tier expert in China who uses this strategy. Surprisingly, she found one—

the veteran trader "Shanghai Twelve" with over 20 years of experience in swing trading.

Once she found her, Financial Mom eagerly devoured all her publicly available articles over the years,

trying to understand how such a veteran grew and how she applied swing trading strategies.

She followed her articles from 2011 all the way to 2024 and finally caught up this week.

This confirmed that Shanghai Twelve would be her learning model for the next five years, and swing trading would be her primary investment strategy.

She learned a lot from her and will gradually summarize how to apply it. Today, she shares two key takeaways.
 

01—Speculators vs. Investors 

What left the deepest impression was a passage from Shanghai Twelve’s article "The Counterintuitive Trader at the Top of the Speculative Food Chain":

What is a speculator? 

A speculator is a 'trend believer.' They bet on future trends, aiming for the price gap between the future and the present. Thus, a speculator is inherently a timing trader. To them, any trading asset is merely a good 'trend' target.

What is an investor? 

An investor is a 'value believer.' They bet on quality assets, motivated by the value these assets will create in the future. Thus, an investor is inherently an asset-picking trader. To them, any trading opportunity is just a means to wait for a good 'value' target.

This is brilliantly put—the most accurate definition of speculators and investors I’ve ever seen.

Understanding the essence and differences between speculators and investors helps clarify which approach suits your personality and investment goals.

Speculators focus on timing; investors focus on assets. To a speculator, any asset is just a 'trend' target. To an investor, any timing is just a way to wait for a 'value' target.

For example, Bitcoin and other cryptocurrencies, which Warren Buffett considers valueless, are not investment-worthy to investors but are excellent 'trend' targets for speculators.

Personally, asset-picking is too challenging and demanding:

It requires the ability to identify value, match investment horizons (at least 5+ years), resist market sentiment, patiently wait for the market to recognize your chosen asset’s value, and have the courage to admit mistakes despite sunk costs.

Although I love value investing, I realize that even if I pick a good asset, waiting years to confirm whether I was right doesn’t align with my current mindset or investment horizon.

After a year of practicing swing trading, I found that timing better suits my personality, investment horizon, and goals.

Before turning 40, Financial Mom will likely remain a timing trader.

This is just my personal choice—it may not suit you, so take it with a grain of salt.
 

02—Two Entry Methods for Swing Trading

From Shanghai Twelve, I learned about two swing trading entry methods:

1. Light positions with wide stop-losses: Suitable for traders who can identify the broad trend but lack precise timing. They can amplify positions by trading multiple assets lightly.

2. Heavy positions with tight stop-losses: Suitable for traders with precise timing, but they usually focus on few or even just one asset.

Shanghai Twelve uses the second method.

As she said, heavy positioning is hard to master without years of experience.

It requires precise entry skills, quick adaptability to market volatility, and high psychological resilience—demanding both technical prowess and mental discipline.

This aligns with John Templeton’s quote:

Humans aren’t born omniscient, but heaven grants one gift to the diligent—they observe and occasionally find a mispriced bet. When heaven offers this chance, the wise bet heavily. Otherwise, they stay still.

I love this approach but lack the ability for now.

For beginners, the best way to learn heavy positioning is: Risk profits, not principal.

In other words, stay patient and light until you have profits, then use those profits to go heavy on the most certain opportunities.

The key is understanding: Missing out due to uncertainty isn’t a mistake—acting blindly is.

Always trade only the most certain opportunities you understand and manage risk.

Both entry methods have pros and cons. Choose based on your capabilities.

Hope this helps—see you in the next post.

Disclaimer: This article shares Financial Mom’s trading philosophy—not investment advice. Mentioned stocks are not recommendations. Markets are risky; invest wisely.