What A Good Swing Setup Actually Looks LikeJPMorgan Chase & Co.BATS:JPMBlueBeckAsk ten traders what a good setup looks like and you'll get ten answers. Here's mine, and more importantly, why each piece is on the list. 1. The trend is already up. Moving averages stacked in order — the fast one above the slow one, price above both. You're not calling a bottom. You're joining something that's already working. 2. It's a leader, not a laggard. The stock is outperforming the market, and ideally it's in a sector that's outperforming too. Strength tends to persist longer than people expect. 3. It's pulling back, not breaking down. The best entries come when a strong stock takes a rest — drifting back toward a moving average on lighter volume. A pullback looks orderly. A breakdown looks urgent. 4. It isn't stretched. This is the one beginners skip. A stock that has run far above its 20-day average has already made the move. Buying it there means your stop has to sit a long way below, which either costs you real money or forces a stop so tight the normal wiggle takes you out. Let it come back to you. 5. There's a level where you're clearly wrong. A swing low, a moving average — some line that, if broken, means the setup failed. If you can't find one, you don't have a setup. You have a hope. 6. You can actually afford the risk. The distance to that stop, times your share count, has to fit inside the small fixed loss you've decided to accept. The uncomfortable part Most charts fail this list. That's the point. A setup you have to argue yourself into is a setup you should skip. The ones worth taking tend to be obvious within a few seconds. Educational only — not financial advice.