Swing Trading)

STRATEGY LAB (SWING TRADING) TRADING PLAN [COMPANY ADDRESS] 1 STRATEGY LAB (SWING TRADING) OBJECTIVE The core class objective is to identify stock market strength and weakness through the performance of Strategy Lab portfolios. Secondarily, we’ll also practice swing trading at the end of class. That objective will be to find stocks that have traded in somewhat predictable patterns and either go long or short as those stocks are bouncing off key support or resistance areas. We will then try to flatten those trades within a few weeks as the stocks either hit our price targets or stop loss levels. WATCH LIST CRITERIA 1 Stocks that are among the holdings of the ETF strategy that the class is focusing on that week 2 Stocks that are reasonably liquid (example: an average of at least 100,000 shares traded per day) 3 If planning to short the stock, it needs to be considered Easy-To-Borrow (ETB) on thinkorswim 4 Stocks that have appeared to trade in somewhat predictable patterns in the recent past ENTRY RULES 1 When a stock has pulled back to a support area, buy it when it is bouncing up off support 2 Consider using the Close Above High Of Low Day (CAHOLD) as a buy trigger when possible 3 When a stock has gone up to a resistance area, sell it short as it is bouncing down from resistance 4 Consider using the Close Below Low Of High Day (CBLOHD) as a short selling trigger when possible RISK MANAGEMENT 1 With any active swing trading strategy, assume you’ll be wrong often and position size accordingly 2 Maximum trade risk (distance from entry to stop) of 1% of account value on any swing trade 3 The total investment amount of any one swing trade should not exceed 4% of account value 4 Attempt to have less risk than reward possibilities in each trade (risk/reward ratio of 1.0 or less) EXIT RULES 1 For a bullish swing trade that is a winner, exit at a price target near expected resistance for a profit 2 For a bullish swing trade that is a loser, a stop loss will be triggered below support for a loss 3 For a bearish swing trade that is a winner, exit at a price target near expected support for a profit 4 For a bearish swing trade that is a loser, a stop loss will be triggered above resistance for a loss 2 ADDITIONAL NOTES 1 The main technical indicator that we’ll use to assist our decisions is the Market Forecast indicator 2 We will typically apply the Market Forecast indicator on a 3-month daily candle chart 3 Market Forecast lines = Intermediate (green), Near-Term (blue), and Momentum (red) 4 Swing traders often view the blue Near-Term line as most relevant on the Market Forecast 5 The 3 main Market Forecast trades are: Clusters, Confirmation Signals, and Near-Term Divergences 6 Clusters are when all 3 Market Forecast lines are below 20 (oversold) or above 80 (overbought) 7 A Bullish Intermediate Confirmation Signal combines a bullish green line with a red line below 20 8 A Bearish Intermediate Confirmation Signal combines a bearish green line with a red line above 80 9 Bullish Divergence = blue line shows higher highs/lows when price is showing lower highs/lows 10 Bearish Divergence = blue line shows lower highs/lows when price is showing higher highs/lows 11 Adjusting calculated stops a few pennies might occur if you sense more support/resistance areas 12 Consider the risks of trading a stock if it’s reporting earnings within the next few weeks 13 Exiting a current swing trade early could be acceptable if you don’t want to hold through earnings 14 Short selling should be done in taxable margin brokerage accounts and is prohibited in IRAs 15 Even though margin may be required, we try not to borrow additional money from the brokerage 16 Since a stock can only go to zero, be cautious shorting stocks below $20 per share 17 Strategy Lab postings: https://www.marketscholars.com/category/classes/strategy-lab/ DISCLOSURES Trading Plans are provided for informational and educational purposes only. They should not be considered a recommendation of any security, strategy, or specific portfolio allocation. Plans are not all- encompassing and should be viewed merely as an amendable starting point rather than a rigid finality. They were not written specifically for any one individual and each investor is responsible for appropriately customizing Trading Plans for their own personal situation. Neither Market Scholars™ nor its employees are licensed financials advisors or broker-dealers. They are not responsible for financial decisions made by their clients. All investments carry risk, including the risk of loss of capital. Payment of stock dividends is not guaranteed and may be discontinued at any time. Asset allocation and diversification do not ensure a profit nor completely eliminate risk. © 2019-02-01 Market Scholars LLC. All rights reserved. Terms of Service apply. Reproduction, distribution or publiclydisplaying of Trading Plans is strictly prohibited. .

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