Short-term goals: to develop and implement a swing trading
Intermediate-term goals: to become profitable via swing trading
Long-term goals: to generate a consistent yearly income via
What is my tradable universe?
My tradable universe is defined as all
companies on the NYSE and NASDAQ whose outstanding
shares have a total market value of $10 billion or more, and
trade with an average daily volume greater than 10 million and
at a price greater than $10.
I intend for all my trading strategies to
trade this universe. This is because I am predominately
risk-averse and trading large caps with good liquidity is, all
else equal, safer than trading micro-cap penny stocks.
What trading strategies will I use?
I will trade only one strategy until I am
comfortable and successful with it. After which I will develop
another, completely different, strategy and trade them both.
But I will never trade with more than two strategies during
the same period of time.
The initial strategy I will use is a
reversal strategy to the upside (going long). While this same
strategy can be used to the downside (going short), because
shorting stocks is inherently more risky, I will reserve the
full implementation of this strategy (going long and short)
until a later date.
The initial strategy I will use is what I
call '1-2-3 (long only).' It involves purchasing a stock at
the first swing point low after prices break a downward trend.
What are the details of my trading strategies?
The full details of what my 1-2-3 (long
only) strategy involves can be found in my trading
. In brief:
- I will use Finviz to
screen potentials using the three criteria above (market
cap, average volume, price) and select stocks in a
- these potentials will be
put in my TradingView account where I will annotate their
trend lines and moving average lines
- these potentials will
also be put into my excel spreadsheet watch list
- once prices break up
through the trend line and form a swing point low, I will
enter a buy order with TradeKing
- a sell stop order will be
immediately entered as well
- I will ensure my position
size does not exceed the parameters specified above (ie, 2% upper limit on
any one trade, 6% on all open positions, etc)
- the buy and sell orders
will be documented graphically in my TradingView account,
as well as in my trading log and calculator (an excel
- the position will then be
the price drops, the stock is automatically sold and the
position is closed
the price rises, I will replace the initial stop with new
stops at higher levels in order to further minimize losses
and/or lock in profits
What will I do before the markets open?
I will wake up at least one hour before
markets open to set up my workspace and to review the work I
prepared the previous evening. I will turn on my laptops, log
into my TradeKing and TradingView accounts, open four computer
files (my watch list, my trading log and calculator, my
trading plan, and my trading strategy) and unfile my hardcopy
versions. My open positions will be reassessed and my watch
list will be reviewed for potential trades that day. I will
look at stock market index futures for
indications on how the markets will open. I will note how
the overseas markets performed overnight. I will check to
see if any major news events occurred since yesterday and if
any key economic reports will be released or if any other
major events are scheduled that day. If any of these appear
significant, I will be especially sure not to trade in the
opening minutes in order to gauge market reaction. This will
help ensure I trade what I see on the charts and not
according to what I think should happen.
What will I do during market hours?
I will primarily seek out new trading
opportunities while intermittently checking my open
positions. Stops will be adjusted if need be. As positions
close out, I will update my trading log with the details. A
snapshot (.png) of
the chart will be created at TradingView and filed
away for my records. In this way it can be further reviewed
at a future date. If new positions are to be entered, all
calculations (including how many shares to purchase and where to set stops) will
be made well before it is time to hit the buy button.
What will I do after the markets close?
After the markets close I will
primarily maintain and update my watch list where I rank
potential trades according to how likely they are to meet my
trading strategy selection criteria. If any stocks have a high
probability of being traded the following day, they are placed
on a special list within the watch list. I will also update my
journal, where I will record my thoughts and vent my feelings
about each trade, and draw conclusions about the trading day
as a whole.
During the weekend I will study stock
market theory and play catch-up if I fall behind on any of my
tasks during the week.
Will I backtest and paper trade my trading strategy?
I will thoroughly backtest and paper trade
my trading strategy to ensure it is inline with my financial
targets and is within my risk and money management parameters.
Properly documented, the record of my testing becomes a
potentially valuable resource through which I can improve my
Will I regularly reflect on my trading and record these
reflections in a trading journal?
I will strive to use my trading journal
each day. I will review it monthly to identify potential
problem areas and use it as a source of feedback on my trading
system. For example:
If I find I am too exuberant after
profitable trades, I will remind myself of the dangers of
extreme emotions and how trading must be conducted in a calm
and relaxed manner. After the next win, I will force myself to
take a brief break to ensure I understand how successful
traders need an objective, professional attitude while
If I find I am dismayed after each loss, I
will ask myself if I faithfully executed my trading system. If
I did, then everything is going according to plan and I will
take solace in the fact that losses can never be completely
eliminated. They are the costs of doing the business of
If I find I am lax in executing a
particular aspect of my trading strategy, I will remind myself
of the importance of remaining disciplined.
But if I find I am seriously and
consistently deviating from my trading system, I will suspend
my trading and investigate. If it is a problem of
self-discipline, I will suspend my trading until I am
confident I can strictly adhere to my trading rules. If the
issue is found to lie with my trading strategy, I will only
resume trading once corrective measures are taken. This would
include conducting a new round of backtesting and paper
Will I regularly seek to educate myself about trading?
When it comes to trading, I will be the
perpetual student. I will never be satisfied with the trading
results I have, but always seek instead to improve my trading
system. I will do this at the technical level, by studying
classic stock market theory and the trading strategies of
professional traders past and present. But I will also do this
at the psychological level by studying the personality traits
of successful traders. My goal will be to fundamentally change
my own trading style. What I learn will then be fed back into
future iterations of my trading system, with the hopes that
this will improve not only my bottom line, but also the
enjoyment I get from trading.