Swing Trading Plan

[txjeff]

This thread will break down the plans for Swing Trading.

[txjeff]

I plan to add the OptionsMD system to this plan. I am signing up for the course tomorrow after many emails with Doc S.

Here's the thread for his system.
http://www.onlinetradersforum.com/showthread.php?t=609748

[txjeff]

This is Video 2 (free) for Doc S's plan. I think he does a good job of a fundamental explanation of the system. It also shows you some of the power of the ThinkorSwim software for options simulation and trading to create the Iron Condor swing trade. Keep in mind that there are a variety of trades with the system; some 2 month long some 1 week long. I will most likely not submit it for use, however, until I am confident with my skill to perform the trade successfully. This might take a couple of months. Bear in mind that the style is designed to give you far more free time, or even allow you to do the trade in parallel to your job, since it doesn't require an 8 hour per day glued to the screen approach as in day trading.

http://www.jvcranston.com/invest/icvideo.mp4

(Note: File is bigger than 100 mb)

[VielGeld]

So how's the IC coming along?

I'd be interested in partaking in some swing trading involving options to park some extra cash on hand for a bit of income.

I think an access to a market order book could be useful for credit spread option strats to see where price isn't likely to go in the time frame specified.

[txjeff]

So how's the IC coming along?

I'd be interested in partaking in some swing trading involving options to park some extra cash on hand for a bit of income.

I think an access to a market order book could be useful for credit spread option strats to see where price isn't likely to go in the time frame specified.

I just shelled out the bucks last night. This is not an overnight venture and, bam, you're making money. I have the Quick Start Guide and Scheduler for Webinars that are every Sunday at 6 pm CST until April 22nd (1 hour each). It is purposely setup so that you don't skip to the last chapter and try to rush out and use it. That's most likely a good way to lose a bunch of money. I am excited about it though, because I think it's smart and works with any market condition. They also guarantee it with money back plus $500 if you insist that it was not successful. But I like it so far. BUT, one of things I have to do is switch out of Fidelity and get with OptionsHouse as they offer a far better fee for the types of trades that the plan imposes. And, I need to open a small account with TD Ameritrade to get their Think or Swim software. Another imperative for paper simulations of trades before you place them. And options house has it's own trading platform, so that's a second piece of software to learn.

[VielGeld]

Yep, keep those commissions as low as possible. Brokers like to gouge the retail investors on options since they're the new big thing in investment vehicles.

Get those prices down asap! Every penny matters.

[madcowdisease]

I just shelled out the bucks last night. This is not an overnight venture and, bam, you're making money. I have the Quick Start Guide and Scheduler for Webinars that are every Sunday at 6 pm CST until April 22nd (1 hour each). It is purposely setup so that you don't skip to the last chapter and try to rush out and use it. That's most likely a good way to lose a bunch of money. I am excited about it though, because I think it's smart and works with any market condition. They also guarantee it with money back plus $500 if you insist that it was not successful. But I like it so far. BUT, one of things I have to do is switch out of Fidelity and get with OptionsHouse as they offer a far better fee for the types of trades that the plan imposes. And, I need to open a small account with TD Ameritrade to get their Think or Swim software. Another imperative for paper simulations of trades before you place them. And options house has it's own trading platform, so that's a second piece of software to learn.

Just an FYI, ToS offers a free paper trading account with real time streaming charts so it is not necessary to transfer money over to them though they do offer a heck of a platform so it might be worthy of consideration.

[txjeff]

Just an FYI, ToS offers a free paper trading account with real time streaming charts so it is not necessary to transfer money over to them though they do offer a heck of a platform so it might be worthy of consideration.
Hmmm... that's interesting. It was Doc, who uses ToS that suggested that I might have to open a small account. Well, I just scratched the surface on that so far, but I'll check it out tonight/tomorrow. Thx

[useless]

Curious how your options work is coming?

[txjeff]

Curious how your options work is coming?
Had my first webinar this past Sunday. It woke me up to the fact that I need to do a bunch of self reading and then use Doc as a mentor for the actual trades. I was on vacation for a week last week (flight to Joisey), so I did little with the market. I'm trying to find time in between all of these little nagging chores that seem to be endless these days to fully focus on the effort. I hope to start heavy reading tonight.

PS: There are video formats as well. Whatever the brain prefers- video or reading, or both. I like both because I like to go back and highlight key words and then I can skim it multiple times just focusing on the highlights.

[madcowdisease]

Jeff - what are your plans for the Swing Trading thread? Were you thinking of adding ideas or more a "how to" of what would be a preferred set up in a hypothetical sense?

[txjeff]

Jeff - what are your plans for the Swing Trading thread? Were you thinking of adding ideas or more a "how to" of what would be a preferred set up in a hypothetical sense?

Keep in mind, I don't want this to be the TXJeff show, if you know what I mean. This needs to be a group effort. I may come up with some initial ideas based on various experiences and research, but I'm sure others will ring in with more. Obviously, the OptionMD course is geared fully around swing trading, so that will be a key one that I can provide once I learn it. And then there will be a daily plan of stocks, similar to the investment fund lists, but to hold for shorter durations. There may even be some interesting speculative stocks worth holding for weeks or months to see if a merger or say, a drug gets FDA approved, kind of thing. That's what I'm thinking about so far.

[madcowdisease]

Figured I'd post one I've been monitoring for the past few weeks. For the sake of full disclosure FTK is a name I've been watching since last year and at one point I was going to make it my "pick of the year" for 2012. Therefore, it has passed my fundamental screens and barring some breakdown in internal fundamentals all that is left is to pick a good entry target based on the technical aspect.

I'm highlighting FTK in particular to give a glipse of the types of things I look for when planning a swing trade. Think of this as a framework rather than a blueprint as not each minute step is applied to every trade but in general this is an overview of what I've found works for me. I usually look at charts on a daily timeframe for selecting targets worthy of further analysis. If the daily chart looks like it is on the verge of a break out then I investigate further. I define a breakout candidate as a stock in a clearly defined up-trend with a current price that is less than 10% away from the last intermediate price high. This tells me the stock is active in the sense that I won't be waiting around for months as it moves through a consolidation / trading range. The goal is to find active issues that have the potential to make a motive move in one direction or the other. Stocks like FTK that are showing horizontal movement close to the last significant high are said to be "basing" in the words of IBD founder W. O'Neill and the theory is that it is at these crtical levels where early buyers distribute shares and new momentum buyers accumulate shares in anticipation of the next leg up. I look for the "base" to serve as sort of a launching pad for the next up move once the supply and demand for the actual shares of stock reach an imbalance (e.g. all willing sellers at the current price have exhausted their supply and all that is left are the more aggressive buyers who are willing to buy at higher prices).

Once a candidate is identified on the daily timeframe I then dial the lens back and look at the weekly chart from anywhere between a couple years up to even ten years. The main goal with looking at the weekly chart is to identify room to run. The theory goes that there are investors who may be in a losing position in the stock and are looking to get out when they reach breakeven. I question whether this is accurate given the commonly accepted guideline in technical analysis that the more aged a level of significance becomes the lesser its influence. I mean, honestly, who is going to sit on a stock for multiple years waiting for it to come back? Instead most rational investors will just sell out and take the tax loss - though I understand there are some that will wait for breakeven but I don't believe this is the majority and certainly not the institutions that actually move the markets. In my trading methodology, looking at the longer term timeframe tells me, more than anything, what the stock was once valued at. If it received an extreme valuation 5 or 10 years ago it is not inconceivable that if things aligned perfectly it could receive that valuation again - this is what I mean by room to run. I also find it interesting to apply various Fibonacci levels such as Fib Fans and Fib horizontals. If these happen to coincide with a longer-term trendline or area of horizontal support then I know to watch that level closely to see how the share price reacts when that level is reached.

If the breakout candidate passes these two analyses I then move into trade planning which is where I look at intraday timeframes. I wish I had a more concrete rule of thumb for you all, it really becomes more of an art form in selecting the intraday timeframe. I often start out using 15-minute candles and look for key levels of support and resistance. I will sometimes drill down on 5 minute candles to get a more granular feel and if I'm looking at a stock that has moved sideways for several weeks it may be necessary to use 30 minute candles in order to look at 20+ trading days of data and avoid the candles from looking like mush which would be the case if the timeframe was too small (e.g. 1 minute candles over 20 days looks like garbage and might as well be a line graph). At the intraday analysis the goal is to identify specific entry levels and to mark stop-loss levels and levels of potential support and resistance. I prefer to go long a stock that has at least a 2:1 expected gain to loss with a preference for 3:1 or greater.

With the generalities out of the way let's look at an example.

After setting a new 52-week high of $13.71 on January 19th FTK has consolidated in a horizontal trading range between ~$10 and $13 (a 'base')with a bias toward marginally higher lows. The current price of $12.62 is less than 9% from the 52-week high. The first image below shows various trendlines that might act as potential levels of support. Also note that FTK has abided by Fib levels rather well and it has been holding to the 23.6 Feb level over the last month.

The second image shows five years of weekly trading. Note that FTK is currently priced between two longer term levels of significance between $10.50 and $15. After overcoming the first Fibonacci fan in December 2011 it is approaching the middle Fib fan at about the $13.70 level which coincides with the 52-week high and the long term 23.6 Fib horizontal level drawn from the Nov '07 high to the Dec '09 low. Should this prove to be resitance it looks like the $10.70 level where the Andrews' Pitchfork intercepts long-term horizontal s/r could act as strong support which would imply stringing the trading range out another 6 weeks or so.

Finally, on the intraday timeframe shown in the third chart I would potentially be a buyer above Thursday's close with a stop at the intraday low of around $12.32 with a short-term target of $13.21 risking roughly 30 cents in anticipation of capturing 60 cents a share for a 2:1 gain-loss ratio. If $13.21 fails as resistance I'd have my eyes set on $13.71 as the next logical area of resistance and would incrementally raise my stops accordingly.

So there you have it - the framework for my secret sauce. Can't say that any of it is earth shattering and highly complex or even original but it is my own amalgamation of bits and pieces of what I've read over the years and watched others apply. In the end, it's what works for me although it is in some ways evolving all the time. Feel free to monitor some of my breakout candidates in the Stock Picks Trade at your own RISK thread.

http://www.onlinetradersforum.com/showthread.php?t=151020

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[txjeff]

Good info! Certainly the system that is most comforting to your lifestyle and that you can make repeatedly successful is the one you should stick with. And you must learn how to adapt it as market conditions change.

I can tell you that I've never felt more comfortable than with the options trading OptionsMD system. It truly appeals to the level of peace and fearlessness I need, plus free time to do other things. I still have more to learn, but so far I can't complain.

[madcowdisease]

Good info! Certainly the system that is most comforting to your lifestyle and that you can make repeatedly successful is the one you should stick with. And you must learn how to adapt it as market conditions change.

I can tell you that I've never felt more comfortable than with the options trading OptionsMD system. It truly appeals to the level of peace and fearlessness I need, plus free time to do other things. I still have more to learn, but so far I can't complain.

That's a good point you make about the need for a trading system to fit with your lifestyle. I have a regular mon-fri job so I can't sit and babysit my trades all day watching tick charts. I am able to access my account throughout the day but daily duties preclude me from spending a lot of time watching intraday gyrations. This is why swing trading is most applicable to my situation versus daytrading. You better believe if I was retired or independently wealthy and therefore did not have to work I would be more focused on daytrading but swing trades are what works for my discretionary account given the demands on my time.

With that being said, I think it's important to note in this thread about swing trading that I do not trade the markets all the time. One lesson I've learned over the years is picking a favorable market environment is often just as important as picking the right security to trade. I noted this elsewhere on these forums but it's worth repeating, the first 60 day of this year were excellent for trading. As such I was juggling multiple swing trades at a time and leveraging margin to increase buying power and "get in while the gettin' was good" as they say. The market was very forgiving in January and February with not much recourse for a bad trade. Things have moderated a bit lately so I'm not nearly as aggressive. I've gone a couple weeks without making a trade since the beginning of March when I began to perceive the potential upside to the markets as having subsided a bit. Point being, for swing traders who are sometimes not able to keep their finger on the trigger as much as day traders I think it is important to be selective in which market environment you trade and always reminding yourself there is a time to be aggressive and also a time to be more cautious.

[txjeff]

The only thing I can say about day trading, in spite of my having full time to trade, I found it to be unsatisfying and I am no longer a fan of directional trading. Unless it is a trade where there is a significant pullback, and it is then a good time to get in. But this whole game of juggling many stocks, etc, to me is unnecessary and smells of vegas. By concentrating only on SPY, SSO, and SPX, you get very intimate with the slow moving and far more predictable trades, and you learn how to defend the trade over time. It seems that most every time I try to get on to a momentum trade, I might make some money, but you simply never know when some big shot is going to come in and dump a huge short (or visa versa) on the trade and spoil it.

This is why the optionsmd system is simply the most sensible thing to me and I can ignore all the pumping with the rest of the market. And there is absolutely no sleep lost wondering what might happen overnight. Even better.

[Blaine Tarr]

But this whole game of juggling many stocks, etc, to me is unnecessary and smells of vegas.

LOL! My problem is I usually get bored watching something like SPY, so I have to be all over the place seeing whats on the move. Momentum trading isn't for everyone. I'm glad you have found something you like and is profitable. That's the most important part. :beerglass:

[txjeff]

LOL! My problem is I usually get bored watching something like SPY, so I have to be all over the place seeing whats on the move. Momentum trading isn't for everyone. I'm glad you have found something you like and is profitable. That's the most important part. :beerglass:

Yeah, I heard you have that Monster drink adrenaline method. Har.

I was doing that for awhile, and actually was pretty lucky (key word - luck).

But I can only tell you the more I learn about Options, the more I realize they are nothing to jump into quickly with real money. There are so many moving parts (Delta/Theta/Gamma/Vega), and when to know what part of that equation is effected based on the underlying stock movement. And the most commonly used trades, Buying Calls/Puts, are the worst kind of Debit trade right out of the gate. Yet this is what is promoted by most brokers. It's no wonder so many regular folks get turned off to the market quickly as they are herded toward low percentage trades.

As far as getting bored, well I don't want to make it sound like all of the trades in OptionsMD are the boring kind with a 2 month swing. That is one of the primary trades focused on, BUT, simultaneous to those are weekly trades (low probability) and directional spreads and a goal to own a stock if the price drops to a certain point. But, again, the course narrowly and purposefully focuses on the S&P indices and ETFs where Doc's mastery resides.

My interest is solely on continuous profits and I have no problem sacrificing the adrenaline Vegas high for dependable profits. In fact I plan on going back to full time work, so I will have less desire to meddle with a trade that is doing well. :turtle:

[VielGeld]

Hmm... since this group needs something to get it going, I'll re-post a trade I took on Thursday night from another forum I go to. Lots to read, but I think I really broke down the trade, so it should be beneficial stuff:



Hi VG

Do you define 'refine' as getting a better price?

I used to think this was the case, but have now worked out it may mean less pips for that trade. I drill down to get additional confirmation in price turning, which has increased strike rate (so far) as I am no longer stepping in front of trains.

Will have to review again at later date though. Reckon its worthwhile exercise for ppl to try at least.

Refine can mean more profits or less risk, or both.


You just get a better view of the important intra-day levels and this can tell you whether it might be better to be patient and buy/sell a little bit later. A bit of confirmation isn't bad, either.


For example, your setup went by 1.xx50 on Eur/Usd and the 50 is becoming a point of resistance. Then by experience I can tell selling here might be a good entry if the 50 is also a current point of mean reversion (MR). I was looking at a potential trade last night at around 7 or 8 pm EST. The level of 1.225 and its accumulation around there during the evening told me something was up.


But I couldn't tell if it was going down straight away or if it was going to pullback before dropping. The lower T/Fs can give clues to this, and I saw pretty clearly the start of a sell-off after the Draghi ECB comments. So looking at a lower T/F makes me go "maybe waiting a bit longer until it sets up right would avoid going through that drawdown".


Pic to show what I mean:


http://i1202.photobucket.com/albums/bb363/VielGeld/th_Jul122012-1H.png (http://s1202.photobucket.com/albums/bb363/VielGeld/?action=view&current=Jul122012-1H.png)


The trendline shows the very clear effect of the 50 level there. It shot up to 1.23 (a trade I took! :D), then got ploughed and became resistance. Unfortunately, by lack of exp. I couldn't tell where it was going no matter what so I didn't take the trade (:cry:). Anyway, the idea was it was either going to go up to about 1.227 (higher end of MR), or go down to about 1.222 (the lower end of MR).


Turns out I could have held all the way down to 1.217! Of course, I'm working during the day and can't monitor that stuff, so I would've put TP at 1.222 and it would've still been good for some 30 pips.


Stuff like this is why I like refining a trade... But it also made me forgo the trade. :cry: So maybe there's wisdom in just getting your price and letting it run and properly size bets to prevent drawdowns from hurting you...


------


All that said, a current trade I'd be looking at is for current price @ 1.2205 to go all the way to 1.225 because of MR. Given tomorrow is a Friday, it might just work out all right, but you never know, of course...


Anyway, this is what I see on the 30s (albeit zoomed-out a bit):


http://i1202.photobucket.com/albums/bb363/VielGeld/th_Jul122012-30S.png (http://s1202.photobucket.com/albums/bb363/VielGeld/?action=view&current=Jul122012-30S.png)


So you can observe that 1.22 is holding (somewhat, lol...). You could put on a limit order for 1.22 or take the trade now if you'd prefer with a SL of 1.217 (today
's low) and TP at 1.225 or 50 gain/30 lose = 1.67 RR.


... And that's how I look at trades and the lower T/Fs for confirmation/risk reduction. :cheesy:




Hope you don't mind a bit of an addition to my previous post...


I decided to take that trade I was talking about there. Here's the pic of my screen:


http://i1202.photobucket.com/albums/bb363/VielGeld/th_Jul122012-1.png (http://s1202.photobucket.com/albums/bb363/VielGeld/?action=view&current=Jul122012-1.png)


So basically you can see the accumulation there on the 5m and 30s where price is forming a base a bit below 1.22. You certainly don't see this on the 1h chart where all you get is a single red bar. To me, that isn't sufficient to put a trade on.


Of course, MR can go both ways. Lots of air under my price on the 5m, so it might well retrace the whole thing.


However, price just shot up a couple pips seconds after entering, which is another thing I look for. If it does that, then I believe I waited until just the right moment to put on the trade.


Here's the pic to show what I mean since it happened while typing this up:


http://i1202.photobucket.com/albums/bb363/VielGeld/th_Jul122021-2.png (http://s1202.photobucket.com/albums/bb363/VielGeld/?action=view&current=Jul122021-2.png)


So in this sense, I believe my "refinement" to be beneficial! :cheesy:


(Until I post that this trade was an utter loser for wtv reason and so am I. :cry:)


Last post out of of me on this particular side-track.


What happened:


http://i1202.photobucket.com/albums/bb363/VielGeld/th_Jul122012-3.png (http://s1202.photobucket.com/albums/bb363/VielGeld/?action=view&current=Jul122012-3.png)


So yeah, big loser, which I managed into smaller loser. I suspect the MR I saw on the 5m was against me, and I should have been more attentive to that.


Nevertheless, it shows that refinement can get you a good price on both entry and exit if you're tuned in to it.


Now, as for whether it makes you more pips than foregoing the lower T/Fs... Gonna see about that. :lol:



Long Eur/Usd 1.2199.


TP is 1.2245


SL is 1.2175



Closed for -7.


[snip]


Hmm... While this was my only loser this week, it's probably also the one that's got my gears running the most.


Several elements stand out:


1) I could have closed it at a profit of +10 before it shot down against me. Several times.


2) My analysis of the range was correct and my stop of 1.2175 was correct as well. What I hadn't anticipated was the run down to the recent low (below 1.217), which would have triggered my stop anyway and caused a loss.


3) My original view that the 50 would be blown was correct, but it happened later than anticipated.


There are several things to consider here:


- I traded this with the levels present on the 1h chart. That is where my trade idea originated.


- I failed to notice the proper levels on the 5m and the concurrent PA (1.221, 1.2185, and 1.217).


- I set my targets on an un-even mix of the 5m and the 1h. Upper target was based on 1h, lower target had basis in the 5m.


- I managed my trade with a view on the 5m, so I believed 1.2199 was a good entry. It was not. 1.2185 would have been a good entry, with SL somewhere around 1.216. Much better risk/reward. I instead instigated a scalp of the 5m.


------


Proper management of this trade would have been to close it out at +10 before it shot down. I had ample warning of this on the 30s. Then observing the development of the low at 1.2185, I could have chosen it as a good entry for low risk and put in a stop below the recent low of 1.217. Target would have been the same, but higher profit at lower risk.


In the future:


More patience before putting on a trade, or better perspective of the levels in play according to time. There was probably no way for 1.221 to be breached during the Asian session given the resistance it encountered on the 5m before shooting down to 1.2185.


While I am used to putting on (waiting for) trades on the 5m as evidenced from my good entry at 1.2199, I need to become better at doing this according to the 1h if I'm to do better swing trades.


*Whew*


There. I feel better now. This one trade was bugging the hell out of me for all the missed opportunities in it. :mad:

[madcowdisease]

Just a general question for the group - what are a couple of your preferred stock screen providers you've used over the years? Preferably technicals based. Thanks in advance.

[VielGeld]

FINVIZ is really good among the free ones.

Stocks ain't my forte, so that's all I can offer, lol.

Actually, if anyone here knows of a good news feed where you can heavily customize and filter content, that would be great!

[madcowdisease]

FINVIZ is really good among the free ones.

Stocks ain't my forte, so that's all I can offer, lol.

Actually, if anyone here knows of a good news feed where you can heavily customize and filter content, that would be great!

RanSquawk is a pay site but I here it's good.