The Ultimate Swing Trading Masterclass | Ft Hiren Gabani | MastersInOne | EP - 63
Hiren walks through his swing‑trading journey, from early options losses to a disciplined VCP‑based system, covering stock selection, pull‑back setups, scanner design, risk management and the seasonal timing of aggressive vs defensive market phases.
1h 53m·Guest Hiren·Host Vijay Thakkar·
Learn From Early Mistakes
Hiren’s first foray into options trading without a solid foundation cost him heavily, but the painful loss forced him to pause, study fundamentals and seek mentorship. The episode shows how a disciplined post‑loss routine, combined with the right books and mentors, can turn a disastrous start into a profitable swing‑trading career.
Jumping straight into options without fundamentals leads to big losses
- Hiren started trading in 2019 by jumping straight into options and immediately suffered a Rs 80,000 loss.
- He admits it was “my biggest mistake” because he had no knowledge of options pricing or Greeks.
- The loss caused a period of depression, highlighting the emotional toll of trading without preparation.
- This experience taught him that any trading system requires a solid technical foundation before risking capital.
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00:00:16“When I started in 2019, I directly started with options trading. It was my biggest mistake.” — Hiren
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00:05:09“I had a loss of Rs. 80,000. I was in complete depression.” — Hiren
A forced break after a loss can catalyze deeper learning
- After the Rs 80k loss Hiren stopped trading for 3‑5 months, using the downtime to study technicals and read books.
- The COVID lockdown gave him time to reflect, and he later tried intraday trading in cash to limit drawdown.
- This pause prevented further capital erosion and allowed him to rebuild confidence gradually.
- The lesson is that stepping away after a big loss can be a strategic move to avoid compounding mistakes.
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00:05:51“I stopped trading for 3-5 months. Then COVID came.” — Hiren
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00:06:09“I also started intraday in cash. I know that there is not much drawdown in cash.” — Hiren
Mentors and the right books can pivot a failing trader into a winner
- While scrolling Twitter, Hiren discovered trader Manas Arora, whose cash‑swing‑trading style resonated with him.
- Manas recommended “Trade Like a Stock Market Wizard” by Mark Minervini; Hiren read it three to four times, absorbing concepts of supply‑demand, stage‑2 stocks and VCP.
- The combination of a mentor’s practical advice and a solid textbook gave Hiren a framework to build his own system.
- This underscores the importance of external guidance and structured learning after early setbacks.
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00:07:15“He recommended me a book. Trade like a stock market wizard by Mark Minervini.” — Hiren
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00:08:04“I read it 3-4 times.” — Hiren
Swing‑Trading Style: Momentum & Dead‑Time Avoidance
Hiren’s core philosophy is to ride only when momentum is present and exit immediately when it fades, thereby minimizing dead capital. He aligns his trading schedule with his lifestyle, preferring low‑screen‑time setups that capture 25‑40 % moves without long‑term positional exposure.
Stay in a trade only while momentum lasts
- Hiren states, “As long as there is momentum, I will stay. As soon as the momentum ends, I am out.”
- This rule eliminates the temptation to hold positions through consolidation phases that drain capital.
- By defining a clear exit trigger tied to momentum decay, he reduces the psychological strain of watching a stagnant position.
- The approach also aligns with his goal of catching “small swings” rather than chasing large, uncertain moves.
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00:00:31“As long as there is momentum, I will stay. As soon as the momentum ends, I am out.” — Hiren
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00:00:42“What matters to me is that I have to catch small swings in the market.” — Hiren
Avoid dead‑time by limiting position size and duration
- Hiren explains that a 30 % sized position that sits idle for 4‑5 months ties up capital without earning.
- He therefore caps each trade at 10‑20 % of his account and looks for setups that move 25‑40 % within weeks.
- When a stock enters a consolidation or “base” phase, he exits regardless of the previous leg’s size.
- This discipline ensures his capital is continuously working, especially important in a seasonal market where opportunities are clustered.
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00:12:49“You buy a stock with 15% stop loss. It moves for 30‑40%. After that, the stock kept consolidating for 4‑5 months.” — Hiren
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00:16:23“I have to catch the move of this much percentage. Sometimes I get more.” — Hiren
Match trading style to lifestyle to keep screen time low
- Hiren notes that a full‑time job limits his ability to watch markets continuously, so scalping and intraday are unsuitable.
- He designs a swing‑trading system that requires only a few decisions per day, typically during market open.
- This lifestyle‑aligned approach reduces burnout and improves consistency.
- The principle “first look at your lifestyle, then pick a method” is a recurring theme throughout the conversation.
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00:12:00“If you are a working person, you don't have time to see the market. Then you can't do scalping and intraday.” — Hiren
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00:12:31“I will make a system where my screen time is very less. I have to take very few decisions in the live market.” — Hiren
Volatility Contraction Pattern (VCP) Essentials
The VCP is the backbone of Hiren’s swing‑trading edge. It requires an up‑trend, price‑contraction, and dry‑volume contraction before a breakout. Misapplying VCP in down‑trends or ignoring volume dryness leads to failure.
VCP only works on stocks with a prior up‑trend
- The first rule Hiren cites from Mark Minervini is that the stock must already be in an up‑trend before a VCP can form.
- This ensures buyers are already present, providing the urgency needed for a breakout.
- He warns that buying a VCP in a down‑trend is a common mistake that leads to false signals.
- The up‑trend prerequisite acts as a filter that dramatically improves VCP success rates.
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00:31:50“The first rule is that the stock should be in uptrend.” — Hiren
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00:31:10“Mark Minervini's first criteria is up trending stock.” — Hiren
Each contraction must show shrinking price falls and dry volume
- Hiren illustrates a series of price drops: 15 % fall, then 7‑8 %, then 3 %; each contraction is smaller, indicating buying pressure absorbing supply.
- Simultaneously, volume contracts and becomes “dry,” meaning sellers are losing interest.
- When price stops falling and volume is low, even a small demand can trigger a rapid move upward.
- This dual contraction pattern is the hallmark of a high‑probability VCP.
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00:31:47“Selling pressure is absorbed in every contraction.” — Hiren
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00:32:30“Volume should be dry in each contraction.” — Hiren
Applying VCP without context (market phase, stock stage) leads to failure
- Hiren stresses that patterns alone are insufficient; the market’s overall phase (bull, bear, choppy) and the stock’s stage (e.g., stage 2) must be considered.
- He cites examples where VCPs in down‑trends or during a market correction produced losses despite perfect pattern formation.
- By integrating VCP with stage‑2 confirmation and market breadth, he filters out false setups.
- This holistic view turns VCP from a static pattern into a dynamic, context‑aware edge.
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00:38:45“If you blindly follow any setup or pattern, you will not make money.” — Hiren
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00:39:08“Mark Minervini said one thing in the book Market wizard that is context.” — Hiren
Stage 2 Stock Concept
Stage 2, as defined by Minervini, is identified by the 200‑day EMA turning upward and a strong leg with volume contraction. Hiren uses this as a confirmation that a stock has moved from accumulation to a momentum phase, making it suitable for his swing setups.
Stage 2 is signaled when the 200‑day EMA starts turning up
- Hiren watches the 200‑day EMA; when it moves from flat or down to an up‑trend, it indicates the stock is entering stage 2.
- This EMA turn suggests that long‑term buyers have taken control, providing a backdrop for short‑term momentum.
- He uses this as a prerequisite before looking for VCP or pull‑back setups.
- The visual cue simplifies the screening process for large‑cap versus small‑cap opportunities.
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00:25:24“Stage 2 stock is when 200 EMA starts turning from here.” — Hiren
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00:25:28“If 200 EMA is in uptrend, it means the stock is in momentum.” — Hiren
A strong leg with volume contraction confirms stage 2
- Hiren looks for a “strong leg” (20‑40 % move) accompanied by a sharp increase in volume, followed by a rapid drop in volume during the pull‑back.
- The combination signals that large players have entered, and the market is now absorbing supply.
- This confirmation reduces false entries that might arise from mere EMA movement without real buying pressure.
- He cites multiple examples (R‑Power, UCO Bank) where stage 2 confirmation preceded a successful swing trade.
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00:55:01“Strong leg comes with volume contraction. The volume is getting dry.” — Hiren
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00:55:06“The stock has made a strong leg and volume is drying, confirming stage 2.” — Hiren
Stage 2 stocks respect the 10‑20 EMA range during pull‑backs
- Once a stock is in stage 2, Hiren observes that pull‑backs typically settle near the 10‑20 EMA, providing a natural support zone.
- He uses this zone to place entry orders (often inside bars) and tight stop‑losses.
- The consistency of this behavior across winners (e.g., COCHINSHIP, R‑Power) gives him confidence to trade multiple stocks simultaneously.
- This rule also helps differentiate stage 2 stocks from those merely in a flat or down‑trend where the EMA bounce is absent.
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00:25:09“I generally use 10, 20 because I am a momentum trader.” — Hiren
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01:04:01“If the stock respects 10‑20 EMA, it is a strong mover in stage 2.” — Hiren
Pull‑Back Setup Rules
Hiren defines a high‑probability pull‑back as an orderly 12‑20 % retracement in a stage 2 stock with dry volume. Hard, fast pull‑backs indicate strong selling pressure and are avoided. The setup also requires a tight entry near the 10‑20 EMA and a stop‑loss at the previous day low.
Pull‑backs should be 12‑20 % and occur in an orderly, slow manner
- Hiren’s data shows that big winners typically retrace 12‑20 % before resuming the up‑trend.
- He differentiates “orderly” pull‑backs (slow, smooth decline) from “hard” pull‑backs (sharp drops in 2‑3 days).
- An orderly pull‑back indicates that sellers are exhausted and the stock can be bought near the 10‑20 EMA.
- This rule filters out noisy moves that usually lead to stop‑loss hits.
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01:03:16“Big winners' pullback is in the range of 12‑20%.” — Hiren
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01:57:08“Hard pullback vs orderly pullback – hard pullback is fast and has high selling pressure.” — Hiren
Dry volume during the pull‑back confirms reduced selling pressure
- During the retracement phase, Hiren looks for volume that is significantly lower than the preceding leg, indicating that sellers are no longer aggressive.
- Dry volume combined with an orderly price decline signals that the market is ready to absorb a new buying wave.
- He contrasts this with scenarios where volume spikes during pull‑back, which often precede a failed breakout.
- This volume filter adds an extra layer of confirmation beyond price alone.
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00:33:06“Volume is getting dry during the pull‑back.” — Hiren
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00:33:10“If the volume is increasing here, then that stock is of no use to me.” — Hiren
Enter near the 10‑20 EMA and place stop‑loss at previous day low
- Hiren’s entry rule is to buy on an inside bar that forms near the 10‑20 EMA after an orderly pull‑back.
- The stop‑loss is set at the previous day low (PDL), which historically is rarely broken by winners.
- This combination yields a tight risk‑to‑reward profile (often 1:4 or better).
- By standardizing entry and exit levels, he removes discretionary guesswork and improves consistency across many trades.
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01:06:12“I will place the order where I buy it on the high of the mother candle.” — Hiren
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01:09:19“I put stop loss at previous day low.” — Hiren
Scanner & Stock Selection Framework
Hiren uses three primary scanners—20 % monthly gainers, 30 % monthly gainers, and stocks within 25 % of their 52‑week high—to isolate high‑potential small‑ and mid‑cap stocks. He then combines the filters, applies volume‑dryness and stage 2 checks, and manually adds IPOs to capture early movers.
Three core scanners capture high‑momentum candidates
- The first scanner looks for stocks that have gained >20 % in the current month.
- The second expands to >30 % monthly gainers, targeting medium‑term momentum.
- The third selects stocks trading within 25 % of their 52‑week high, implying limited supply and potential breakout.
- Using these three filters together yields a manageable list (≈100 stocks) that are likely to be in a strong up‑trend.
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00:26:50“I have three scanners: monthly 20% gainer, 30% gainer, stocks within 25% range of 52 week high.” — Hiren
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00:28:07“If any of the three conditions are fulfilled, the scanner will give me the stock.” — Hiren
Combining the three filters creates a “combined winner” list
- Hiren merges the three individual scanner outputs into a single list, reducing duplication and focusing on stocks that meet any one of the criteria.
- He deliberately keeps the combined filter simple, avoiding over‑tight tightness criteria that would shrink the list to ~100 stocks.
- This balance provides enough opportunities (30‑50 trades per year) while still allowing thorough analysis of each candidate.
- The approach also leaves room to manually add IPOs and other special situations.
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00:28:15“I combined all three. If any of the three conditions are fulfilled here, then the scanner will give me the stock.” — Hiren
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00:29:46“I have a list, a tracking list. Whatever new IPOs are coming, I manually add it in it.” — Hiren
Volume‑dryness and stage 2 checks are applied after the scanner output
- After a stock passes the scanner, Hiren checks whether the recent volume is drying, confirming reduced selling pressure.
- He then verifies the 200‑EMA is turning up (stage 2) before considering a VCP or pull‑back entry.
- This two‑step validation filters out false positives that may appear strong in raw price movement but lack the underlying supply‑demand dynamics.
- The result is a high‑probability shortlist that aligns with his swing‑trading edge.
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00:30:04“The stock should have 200 EMA. If it has 200 EMA, then it will come in your scanner.” — Hiren
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00:33:06“If the volume is dry, that shows the selling interest is ending.” — Hiren
Position Sizing & Stop‑Loss Discipline
Hiren uses a fixed‑fraction risk model (1 % of account per trade) and places stop‑losses at the previous day low, which historically is rarely breached by winners. He adjusts position size based on stop‑loss width, keeping risk constant while varying exposure.
Risk a fixed 1 % of account per trade to keep exposure consistent
- Hiren’s calculator shows that on a ₹10 lakh account, a ₹10,000 risk equals 1 % of capital.
- By keeping risk constant, he can scale position size up or down depending on stop‑loss distance without changing overall portfolio volatility.
- This method also simplifies trade‑size decisions across different stocks and market conditions.
- Consistent risk per trade is essential for long‑term drawdown control, especially in a seasonal market.
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01:07:44“I have a calculator. For 10 lakh account, risk 10,000 = 1% of the account.” — Hiren
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01:41:40“I keep my risk same per trade in bull market.” — Hiren
Place stop‑loss at the previous day low (PDL) because winners rarely break it
- Hiren observed that most big winners never breach their PDL, making it a reliable stop‑loss anchor.
- He sets the SL at the PDL for each trade, which often results in a tight risk‑to‑reward ratio (e.g., 1:4).
- This rule also reduces the temptation to widen stops, preserving the edge.
- Historical data shows that using PDL cuts unnecessary losses while allowing enough room for normal volatility.
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01:09:19“I put stop loss at previous day low.” — Hiren
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01:07:08“Past winners don't break previous day low. Most of the times.” — Hiren
Adjust position size based on stop‑loss width to keep risk constant
- When the stop‑loss distance widens (e.g., 8 % SL), Hiren reduces the number of shares, keeping the monetary risk at the same 1 % level.
- Conversely, a tighter SL (e.g., 4 %) allows a larger position size, increasing potential profit while maintaining the same risk exposure.
- This dynamic sizing ensures that each trade contributes equally to portfolio volatility, regardless of the stock’s price level.
- The practice also prevents over‑leveraging on volatile stocks and under‑leveraging on stable ones.
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01:07:31“If I have a 8% SL, my size will be smaller. If I have a 4% SL, my size will be bigger.” — Hiren
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01:07:44“I keep my risk same per trade, even if the SL changes.” — Hiren
Profit‑Booking & Trade Management Rules
Hiren follows a systematic profit‑taking plan: move stop‑loss to break‑even at 2R, book half at 4R, and trail the remainder with the 10‑EMA. The approach varies between bull and bear markets, with more aggressive exits in strong trends and defensive scaling in choppy phases.
Shift stop‑loss to break‑even at 2R to make the trade risk‑free
- Once a trade reaches twice the risk (2R), Hiren moves the stop‑loss to the entry price, eliminating any downside risk.
- This step locks in the profit and frees capital for new opportunities while keeping the position open for further upside.
- The rule is applied uniformly across all trades, regardless of market phase, ensuring disciplined risk management.
- It also aligns with his philosophy of “make the trade risk‑free as soon as possible.”
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01:22:15“At 2R, bring stop loss to break even.” — Hiren
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01:22:09“I will keep break even at 100 my Stop Loss.” — Hiren
Book half at 4R and trail the rest with the 10‑EMA
- When a position reaches 4R, Hiren sells 50 % of the position to lock in gains.
- The remaining half is trailed using the 10‑EMA, allowing the trade to capture further upside while protecting against reversal.
- This hybrid approach balances profit capture with the chance for larger moves, especially in high‑volatility stocks.
- The rule works in both bull and bear markets, though the trailing distance may be tightened in choppy conditions.
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01:26:10“At 4R, I book half and trail the rest with 10 EMA.” — Hiren
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01:34:08“If I see the stock moving fast, I will book the whole thing.” — Hiren
Adjust profit‑booking aggressiveness based on market phase
- In a strong bull market Hiren may let trades run to 8‑10R before taking any profit, whereas in a bear market he books half at 4R and becomes defensive.
- He also reduces position size and risk (e.g., from 0.8 % to 0.4‑0.5 %) when market conditions turn choppy.
- This flexibility prevents large drawdowns during adverse phases while still exploiting high‑reward opportunities when the market is favorable.
- The rule ties back to his seasonal view: be aggressive in “good” months, defensive in “bad” months.
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01:25:57“In bear market I book half at 4R and become defensive.” — Hiren
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01:51:14“In bull market I keep my risk at 0.8% and ride the trade longer.” — Hiren
Seasonal Market Timing – Aggressive vs Defensive Phases
Hiren treats the market as a seasonal business, with 3‑4 high‑reward months and the rest being defensive or choppy. He uses market‑breadth indicators, the 10‑20 EMA relationship, and the 200‑EMA to decide when to be aggressive, defensive, or sit out entirely.
The market is seasonal; opportunities cluster in a few months each year
- Hiren states that “the market is seasonal. The same money is not going to be made for 12 months.”
- He observes that his best months (e.g., June 2023) deliver 30‑40 % returns, while other periods are flat or choppy.
- This seasonality drives his decision to be aggressive during high‑reward windows and defensive or out of the market otherwise.
- Recognizing the seasonal pattern prevents overtrading during low‑volatility periods.
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00:00:47“The market is seasonal. The same money is not going to be made for 12 months.” — Hiren
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00:00:54“When you become aggressive, then defensive, opportunity will not be over.” — Hiren
Use market‑breadth (percentage of stocks above 200‑DMA) to gauge market phase
- Hiren tracks the proportion of stocks trading above the 200‑day SMA; when it falls below ~10 % the market is considered bearish.
- Conversely, when the majority of stocks are above 10 %, it signals a bullish environment suitable for aggressive swing trades.
- This breadth indicator helps him decide whether to increase position size, stay defensive, or sit out entirely.
- The metric is simple, free, and provides an early warning of regime changes.
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00:46:31“If the index is below 10 that is green line. I will not do it on this day also.” — Hiren
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00:46:21“When the index is above 10, I will be aggressive.” — Hiren
Switch between aggressive and defensive modes based on EMA trends and volume flow
- In a hard‑money environment (high liquidity) Hiren goes aggressive, taking larger positions and tighter stops.
- When the market shifts to an easy‑money environment (tight volume, choppy moves), he reduces size, tightens SL, or exits entirely.
- The 200‑EMA direction (up for aggressive, down for defensive) and volume dryness are the primary signals for mode change.
- This dynamic adjustment preserves capital during downturns while maximizing upside during strong trends.
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01:42:42“The market runs from hard money environment to easy money environment.” — Hiren
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00:12:20“When the market is good I take full force, when it is bad I become defensive.” — Hiren
Psychological Discipline – Avoiding Style Drift
Hiren warns that drifting between strategies (style drift) erodes edge over time. He advocates a “master‑in‑one” approach: pick a single high‑probability swing setup and stick to it, regardless of short‑term underperformance.
Style drift is a slow poison that destroys long‑term performance
- Hiren describes style drift as “a slow poison” that, even after 15‑20 years, leaves a trader without a viable system.
- Constantly switching strategies after a few months of underperformance prevents mastery of any single edge.
- He emphasizes that true success comes from deep familiarity with one method, not from chasing the next shiny setup.
- This mindset is critical for maintaining consistency over the multi‑year trading career.
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00:15:04“Style drift is a slow poison. Even if you do it for 15‑20 years, you won't have any solution.” — Hiren
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00:14:02“If you keep changing strategies, you will never get a system that works long term.” — Hiren
Adopt a “master‑in‑one” focus on swing trading and ignore other styles
- Hiren declares, “If I have caught swing, then I will swing. I don't do anything else.”
- He deliberately avoids intraday, positional, or F&O trades, concentrating all capital and attention on his swing methodology.
- This singular focus reduces decision fatigue and improves execution quality.
- By treating swing trading as his sole craft, he can refine entry, exit, and risk rules continuously.
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00:15:12“If I have caught swing, then I will swing. I don't do anything else.” — Hiren
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00:13:08“I am not saying that the one who is doing intraday should stop trading. But if it sets with your psychology and mindset, then you can do that too.” — Hiren
Stick to a single system for 2‑3 years to understand its strengths and failure points
- Hiren stresses that a system needs 2‑3 years of proper testing to reveal when it underperforms and when it excels.
- Short‑term failures should be viewed as learning opportunities, not reasons to abandon the method.
- This long‑term view prevents premature abandonment and allows statistical confidence to build.
- He cites his own experience of staying with the VCP‑stage 2 approach from 2021‑2025, refining it each year.
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00:14:50“If you want to make a system, then you have to give 2‑3 years to the proper system.” — Hiren
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00:14:28“I have been in the market for 15‑15 years and still have no system because I kept jumping.” — Hiren
⚙ Agent-readable JSON index — click to expand
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