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Presents The Ultimate Options SwingTrader Course Part 1 With Bill Corcoran I am not a registered broker-dealer or investment adviser. I will mention that I consider certain securities or positions to be good candidates for the types of strategies we are discussing or illustrating. Because I consider the securities or positions appropriate to the discussion or for illustration purposes does not mean that I am telling you to trade the strategies or securities. Keep in mind that we are not providing you with recommendations or personalized advice about your trading activities. The information we are providing is not tailored to any particular individual. Any mention of a particular security is not a recommendation to buy, sell, or hold that or any other security or a suggestion that it is suitable for any specific person. Keep in mind that all trading involves a risk of loss, and this will always be the situation, regardless of whether we are discussing strategies that are intended to limit risk. I am not subject to trading restrictions. Myself and other instructors could have a position in a security or initiate a position in a security at any time. PART 1 • Intro – Welcome – What is it – What it isn’t – Advantages – The Goal • Ground Rules • Optimum Trend ID and Analysis – Day count – Momentum INTRODUCTION WELCOME • Swing trading can be exciting and profitable. • This strategy exploits consistent and often significant momentum moves in stock price. • Swing Trading generally requires more direct management than TREND TRADING but requires less work and has higher return potential than day trading. WELCOME • Over the next several weeks our lessons will be based on real trading opportunities that we have paper traded in my trading group, “The Morning Lab”. • While this course covers all the information needed to provide a complete education on trading OPTIONS for SWING trades, the concepts can be applied to any asset from futures to Crypto currencies. WHAT IS IT?? • SWING trading is a trading style that exploits momentum moves in a stock price that occur within an established trend. • It is a requires active and ongoing daily management of the trade and seeks to capture maximum profit on short term directional gains within a trend. • Risk management is accomplished through proper position sizing and increasingly aggressive stop loss management designed to maximize profit potential over a few days. WHAT IT ISN’T • This is not a “get rich quick” scheme. • It is not “quick and easy” to learn, some effort and time is required. • A “buy and hold” strategy, there is a defined entry and defined exit for every potential trade. • This strategy will not work unless you do, identifying acceptable trends, analyzing those trends and management of trades will take practice and effort. ADVANTAGES OF SWING TRADES • SWING trading typically requires less management than DAY trading. • Can capture large momentum moves in stock price. • SWING trades typically do not expose the trader to draw downs during normal retracements. • Returns on profitable trades can considerable when disciplined stop and position management is employed. WHO SHOULD TRADE IT • SWING trading should be considered by all equity, options, currency and futures traders. • Trading accounts of nearly any size can potentially benefit from exposure to trend trades. • Traders who wish to add a powerful short term trading strategy to their arsenal. THE GOAL • The goal of a SWING TRADE is to strike a balance between maximizing potential profit and managing risk. • This requires increasingly aggressive exit management as the trade progresses. IN A NUTSHELL • You are about to learn one of the most widely used and time-tested trading strategies available! • SWING trading bridges the gap between DAY trading and longer-term trading and investing. • This strategy exploits the power of short psychological momentum driven by the increasing willingness to pay higher prices for an asset or the urgency to sell an asset class at progressively lower prices over a few days in a momentum surge. • Asset price momentum is a powerful psychological force and can offer the trader a significant advantage in securing potential profit in the market. THE GROUND RULES SWING TRADE RULES • SWING trades should only be executed on a stock in an established trend. • A bullish price trend occurs when price activity repeatedly establishes progressively new high prices and higher low prices. • A bearish price trend occurs when price activity repeatedly establishes progressively new low prices and lower high prices. SWING TRADE RULES • In the early phases of the trade our primary objective is to manage and minimize risk while letting the trade develop. • Trade entry should occur on the first day of a bounce from a trending 5 EMA or 10 EMA. • As the trade matures, our focus shifts to moving the stop loss close enough to the current stock price that we can secure accumulated profit but far enough away to avoid being unnecessarily stopped out due to normal trading activity. SWING TRADE RULES • Option selection for SWING trades should favor higher delta options. • Sufficient time to expiration must be selected, plan for the potential of a 5 day trade. • Stop management should always follow the SWING trade exit protocols included in this presentation. SWING TRADE RULES • As with all trading, risk management should be a primary consideration. • Risk is defined as the difference in ENTRY price to the STOP LOSS EXIT price. • Position size is determined so that risk should not exceed 2.5% of total account value at the onset of the trade. • As the stock price moves in favor of the trade, an aggressive exit protocol will help secure short term accumulated profit. TREND ID AND ANALYSIS TREND IDENTIFICATION • Successful SWING trading requires a predictable directional price move in a few day. • One way to find consistent directional moves is to look for stock in an established trend. • A bullish trend is defined as a series of higher highs and higher lows in price over time. • A bearish trend is defined as a series of lower lows and lower high prices over time. • Trends tend to experience short term surges in price for a few days before retracing. INTACT BULLISH TREND HH HH HL HL INTACT BEARISH TREND LH LL LH LL THE DAY COUNT • This SWING trade strategy exploits the observable tendency for stocks in a trend to move in “surges” of price that last for several days. • An ideal SWING trade candidate will usually exhibit 3-5 day moves in the direction of the trend and 1-3 day retracements, typically to a trending EMA. • This activity can be surprisingly consistent and offers clear entry and exit opportunities. BULLISH TREND IDEAL DAY COUNT 3-5 1-3 3-5 1-3 BEARISH TREND IDEAL DAY COUNT 3-5 1-3 3-5 1-3 THE DAY COUNT AND SWING TRADES • While a trend trade can be taken even if this ideal pattern is not present, SWING trades cannot. • For example, a bullish stock may go up for two days then retrace for three then rally again for one day. • While this may create a tradeable trend, it would be nearly impossible to successfully trade this unpredictable pattern in the very short term and should be avoided. • The same is true for bearish stocks that are trending lower but doing so in one or two-day selloffs before retracing. BULLISH TREND NON IDEAL DAY COUNT 1 1 2 1 3 BEARISH NON IDEAL DAY COUNT 1 1 2 2 DAMAGED TREND • In order to take on a SWING trade it is preferable that high probability exists that a trend will continue. • A damaged trend reduces this probability and increases the potential for a deep retracement or a complete reversal. • A damaged bullish trend fails to make higher highs or higher lows. • A damaged bearish trend fails to make lower lows or lower highs. DAMAGED BULLISH TREND HH HH HL LL DAMAGED BEARISH TREND LH HL LL TREND REPAIR • Once a trend is “damaged”, SWING trades should be avoided unless the trend completes the trend repair process. • For a bullish trend this involves taking out the prior high and bouncing from a new higher low. • For a bearish trend this involves taking out the prior low then bouncing from a lower high. • At least one rotation of a 3-5 day move in the direction of the trend with a 1-3 day retracement and a bounce from trending support must be observed. TREND REPAIR AT EMA • In order to maximize the effect of a trend repair, the entry should be considered if the bounce from a new higher low (bullish) or new lower high (bearish) occurs at or very near the trending EMA. • This creates am potential floor of support (bullish) or ceiling of resistance (bearish). • Stops should be placed and managed in accordance with the SWING Trade stop protocol (part 2 of this presentation) BULLISH TREND REPAIR NHH HH HH HL HL LL BEARISH TREND REPAIR LH LH HL LL LL NEXT • Advanced Trend Analysis – Technical Indicators – Price Activity Analysis • Entry Considerations – Position size – Early day 1 – Late day 1 • Option Selection – Expiry – Delta • Stop Management – Delta Conversion – Exit protocol I am not a registered broker-dealer or investment adviser. I will mention that I consider certain securities or positions to be good candidates for the types of strategies we are discussing or illustrating. Because I consider the securities or positions appropriate to the discussion or for illustration purposes does not mean that I am telling you to trade the strategies or securities. Keep in mind that we are not providing you with recommendations or personalized advice about your trading activities.

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