Trading Plan

Trading Style
Swing trading with some day trading when the opportunity allows.
Primary time frame for choosing equities to trade will be daily for both swing and day trades.
When day trading chosen direction is based on daily chart but entered and monitored on smaller time frames.

Trade Setups
Trend retracement setups, reversal setups (extended trends)
Alan Farley’s Master Swing Trading setups
Candle sticks

Money Management
I’m a big believer in the Expectancy formula.
E = AveWin*WLr – AveLoss*(1-WLr)

This highlights the importance of keeping your losses small, letting your profits run and maximizing your Win Loss ratio.

AveLoss should be no more than 1R (accepted risk prior to entering trade) and ensured with a stop loss order.

WLr is improved with strict adherence to trade setup rules and proper execution of stop and profit taking exits.

AveWin is managed with initial profit taking rules and proper trade setup.

When trade is entered a stop loss must be entered and initial profit taking target selected. Stop loss orders and initial profit targets must not be moved farther from entry once entered.

Position Sizing
Try to set risk(R) within 125 - 175 range averaging ~150
Total portfolio risk should be no greater than 3R.

Weekly / Daily routine
Each week I develop a list of 5 – 10 stocks that are setting up as good long and short candidates for the coming week. I also maintain a running commentary on the major indices and how they are setting up for the coming week.
The stock list and indices commentary present me with a plan of which stocks I will closely watch in the following week. If my projected views of the indices follow up to be true I will have a narrow selection of stocks (as well as the index ETFs) to trade.

Trading Rules
1. Enter stop loss order.
2. Define initial profit target before position is entered.
3. Stop loss orders never to be moved farther from entry.
4. Profit targets never to be moved farther from entry.
5. Don’t over trade. (How do I recognize this?)
6. Don’t chase the trend.