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Swing Trading Plan Template

These 3 pages pose a series of 30 questions with model answers, organized into 7 categories.

It can serve as a template for your own swing trading plan.

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The Sonny Burnett Trading Company

Short-term: to develop and implement a swing trading system by month 20xx
Intermediate: to become profitable via swing trading by month 20xx
Long-term: to generate a consistent yearly income via swing trading

V. Trading Strategy

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 strategy document. In brief:

  • I will use Finviz to screen potentials using the three criteria above (market cap, average volume, price) and select stocks in a downward trend
  • these potentials will be put in my TradingView account where I will annotate their charts with 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 [UPDATE: TradeKing is now Ally.com]
  • a sell stop order will be immediately entered as well
  • I will ensure my position size does not exceed the parameters specified above (i.e., 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 worksheet)
  • the position will then be monitored:
    • if the price drops, the stock is automatically sold and the position is closed
    • if 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

VI. The Daily Routine

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 [UPDATE: TradeKing is now Ally.com] 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.

VII. Trading (re-)Assessments

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 trading.

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 trading.
  • 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 trading.
  • 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 trading.

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.

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