Well, if you just took a look, you’ll see this:
The number of trading days it takes to accumulate enough capital to make a single trade. The amount of money a successful short seller needs to exit their positions. The maximum number of bets each trade can take place. The total number of trades you can make (assuming a typical short position lasts for a week).
But a swing low isn’t about a single trade. It’s a combination of all of that. There are two components to it: timing and the size of the move.
The easiest way to determine the timing of a swing low is by simply calculating how long it takes you to be bullish on each stock (as of the middle of the trading day). The formula for calculating this is:
The higher the number of shares you are trading, the longer the swing low will last.
For instance, here’s the calculation for a 1-day move from $80 per share, with an implied swing low of 7:
1-day $80 implied swing low 7: $80
And here is the calculation for a 2-day move from $200 per share, with an implied swing low of 8:
2-day $200 implied swing low 8: $200
The advantage to this calculation is that it is simply calculated by taking the volume of the stock and multiplying it by the number of shares.
The disadvantage is that it does not account for any “dead money”, or the amount of stock that you never even touched during the day. For instance, suppose you bought $10 worth of stock on the trading day, but never touched it. In this case, if you sell on the trading day at $90 per share, you will still own $10 worth of stock on the day as of the calculated swing low (at $80 implied). If your short positions lasted the full week, then you will have $8 of stock in your account at the end of the trading day. So, for $100 per share, you are actually owning 1/4 of the stock. In other words, the stock is less likely to fall much to the downside as it moves higher.
However, this calculation is simply “how far are the two sides of the trade”. It cannot tell you how much volume your portfolio was on; how much “dead money” you have on your portfolio; or any of those other things.
The only way to determine
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