Specificity in my Swing Trades
Its clear after coming back, I need to do several things. My goal here is to eliminate noise and guesswork in my trading and selection. And have a plan for every scenario that can come my way.
-Daily Watchlist Star Ranking
-Finding myself taking 7's
-Need to do star rating before open.
-Specifics in my Trading Process
-No gaps. See below
-Daily Sector Analysis
-Whose hot, whose not, where do I need to let stocks build longer, where do I need in ASAP
-I trade low rel vol names and swing them. They are going to be affected by overall market and sector performance. I need all on my side when I take trades like that.
-Vol cues days before are cues if rel vol is low or high and needs special attention to outside influences.
-I track the Spyders themselves, but I dont think that is deep enough to make a judgment on the tech sector in whole. It sounds better if I make a data tab on the largest tech names, and track there data, and then form an average from that and decide if it is actually hot or not.
-This allows me to eliminate emotion and discretion. No maybes or sorta kindas. Hard numbers and data to give me a clear cut answer. Strong or not. Eyeball test is not enough. Where is volume/money flowing in or out of.
Trading Process
-3 Major Sector Combinations.
-Offense = Tech, Semi, Energy, Industrials, Communication
-Cyclical = Cyclical, Retail, Finance, Materials, Real Estate
-Defense = Defensive, Utilities, Healthcare
Each stock in each sector trades differently. I have to have a different plan for each name dependent on what sector it falls into.
I need to create some kind of flow chart for how I set my risk/adds dependent on this. More if / then statements.
- Volume
-I believe is the 1st to look at. Relative volume / outperforming or underperforming the market will allow me to bend and break some rules. Stocks that act on their own accord regardless of market are trades that I can take and not have to be too concerned with overall direction.
If vol is not there then I have to rely on the overall bias and direction of the market and sector.
Further, dependent on the sector I have to adjust my time horizon.
- Stocks in...
- Semi/Tech/Healthcare/Energy
-Can be traded with a bit more discretion as stocks in these sectors can do what they like. They tend to be more speculative
2. Industrials/Comm/Cyclical/Retail/Finance
-Are where I have to tighten up my ideas. Aside from if they have the key rel volume, these trades have to be in line with market. They can move fast still and give me good moves in a short amount of time, but generally, only if the rest are doing the same
3. Real Estate/Defensive/Utilities/Materials.
-Slow movers that do what the rest is doing. For me to take a trade in this sector, it has to be a leader, or weakest. And further, they have to be taken in mind that they will take a while. Even if there is the volume cues, these have to be traded differently.
-Quick thought, Do I need to look at which sector is strongest and weakest and then pick inside that sector? Or do I scan my stocks and then determine sector strength or weakness. I think I do stock first. Because I am not picking stocks just because I know sector is weak or strong, I pick the stock because it is doing something I like and know I have edge in. Sector doesn't give the edge, it can add or take away, but it is not where I base my trade foundation on.
- Leading Sectors/Leading Stocks
- I do not need to trade any stock that is not a leader in a non leading sector
- A leading stock in the leading sector is the best trade to take.
- A leading stock in a non leading sector is ok to take if
- Star rating of 8 or better
- It has above avg vol
- The sector is not weak
- The market is not weak
- A non leading stock in a leading sector is ok to take if
- Star rating of 8 or better
- It has above avg vol
- Sector remains strong and trending.
So from here I have 3 groups to place a stock on my WL in.
Example,
I want a long on ABBV, NFLX, PEP
1. Star rating, eliminate if 7 or less
2. Vol analysis. Is it much higher than average / RVOL +2?
Yes.
Then trade it as usual with stock being main deciding factor in cutting/adding/holding
No
Is Sector a leading sector? (This is determined by looking at XL* and spreadsheets and comparing % gains and losses)
Yes
-Trade as normal with emphasis on adding risk.
-Trade as normal with emphasis on adding risk
-Trade as normal with emphasis on adding risk if rest of sector is strong
No
-Trade as normal
-Trade as normal if rest of sector is helping
-Do not trade unless sector is helping.
Then sector analysis, (This is determined by looking at my spreadsheets, judging % gains and losses, as well as looking at the 20 stocks in that sector I am tracking and seeing if clearly strong or not.)
Is sector in favor of bias?
Yes
-Trade as normal, with eyes and alerts on other mega cap Healthcare names/XLV
-Trade as normal, be quick to cut if rest of sector is failing.
-Do not trade unless sector is also strong.
No
-No trade until sector is in favor. Trending same as bias or failing to go against.
-No trade. Unless leading stock or high vol.
-No Trade. Unless leading stock or high vol and sector turns in favor. .
Then Leader Analysis,
Is stock a leader or not?
Yes
-Trade as normal
-Trade as normal
-Trade as normal with sector help or high vol.
No
-Avoid unless 9 or 10 star.
-Avoid unless 9 or 10 star and sector help.
-Avoid unless 9 or 10 star and sector help and high vol.
The Market
-As discussed above, is clearly important in making or breaking my swing trades. My trades will not work if the overall market is not with me. My trades will not work if the sector is running against me.
- Selection
- Entry
- Managing
The Setup
These are the big picture setups I am taking.
-Out of consolidation with Trend
-Range high/lo Breakouts
-Trend Reversal
-Opposite Range
There are different daily candle formations that I enter into these big picture setups.
-BO 2nd, BO at, BO Pre
-PB Failure, PB BO, PB Continuation
These different big picture setups do require different ways of management in some regards below. For those that it does matter, I will go through each big picture and how I need to manage it.
The Risk
-Since coming back I have been hurting myself by having too tight of stop losses. I am mixing my day trading with my swing ideas. Swing clearly obviously needs more time and space to work. It is based off of weekly daily and hourly charts, I dont have any business exiting trades, or planning to exit trades off of any time frame lower than.
- At entry
-Stop area is initially decided by the previous Daily candle. This is for all big picture setups. From there I also include a Vol Profile edge if there is one. And then from there I can use the daily 9 and 20MA as a stop as well if there is a break and hold under.
-I am not using the last possible area as my stop. I am using whichever combination of the 3 is the tightest area to risk off of. If the D low is at 96, but the vol prof edge is 95.70, ill use the 95.70. And if the 9/20MA are tight and nearby at 95. I can change my stop and move it to a break and hold and near close under the next day or two as they move closer in my favor, which also tightens my stop.
- After an hour
- After a day
- After multiple days.
-Is sentiment still in favor?
-Yes
-Stop can move to new D low/volprof low/9/20 DMA
-Middle ground
-Same as yes until sentiment changes.
-No
-Stop moves to vwap loss
-Look for re entry if sentiment turns in favor
-Re entry rules covered more lower.
-If Sentiment changes against me AND internals are reflecting against me and following through, stop changes to hold under vwap + HTF zone
- News
The Entry
- Rules
-9MA on 1hr must be in contact with candle
-Can be at any point, as long as significant D level/Area/Vol Prof zone has held higher.
-HOD Break
-VWAP failed break lower
-Intraday bo
-LOD failure and reclaim
-Failed breakdown into sig level/area.
-Market sentiment cannot be against trade
-Judged by spreadsheets, 1hr trend on Indices and SPYders
The Expectations
-Momentum trades should work right away. Pullbacks are expected and wanted since thats where I can add. But these trades should never lose the D 9/20, ideally the 9/20 1hr ma.
-These are not day trades. I am wanting to see pullbacks so I can add. If I get my move to PT from A to B thats fine I will still take that quick win. But ideally I want it to take a while so I can see it hold higher, so I can add, so I can scale out. My account is not large enough to start with higher risk and multiple contracts to scale so I am limited in that sense.
-These trades are taken alongside confirming overall market sentiment. Long when the market is strong and holding higher levels.
-From starting og entry, to each add, I expect to see the trade work in favor right away. Even though I am basing risk off of longer term levels and sentiment, it is still important to see these trades working and confirming upon each entry, since each entry point is at a point I believe the market should be moving in my favor right away.
-I should not expect sentiment to remain clearly bullish 100% of the time I am in a swing. Markets move up and down. As long as the down is not breaking any significant levels, I should expect the longer term sentiment trend to continue.
The Adds
-Majority of the time, there is clear structure in my trades to work with. Usually 3 different levels to look to add off of. HTF only, not 1min, not VWAP alone.
- INTRADAY
- AFTER DAY 1
- Rules
Adding to winners?
-A winner means I have gotten a good initial move from my first entry. It has made new structure higher up in favor. As long as 1hr 9ma is touching, then the add is ok.
Adding to losers?
-The only time this is ok, is if price fails to meet my stop conditions, reclaims a HTF zone/level reclaims 9ma, and turns up along with strong market sentiment.
-Adding to a loser means I was pretty close to stopping out. If the trade meets my stop conditions, then I am out, but if it holds that last area before I bail, that is an excellent place to expect it to turn back in my favor and return the run up.
Adding to breakeven?
-If price retraces back to entry and holds, as long as 1hr 9ma is still under price and touching it is an ok add when it turns back in favor.
The Warning Signs
Warning signs alone do not mean exit the trade.
-There are a number of variables to be looking out for
-Failed breakouts, intra, HOD, Triangles
-Market suddenly fails big and follows through
-Sentiment at close breaks trend in favor
-Failure to reclaim vwap
-Failure to hold more than 1 level/area of interest
-Close opposite/Loss of 9/20MA on 1hr
The Early Cuts
-Of the above warning signs, there is some wiggle room in my trades dependent on where in my trade these signs occur.
-Winners
-Allow the pullback to happen.
-If loses 20MA on 1hr, and sentiment has changed or other failures, cut it.
-If just one of the above, stop can move to hold under D low, or nearby vol prof zone.
-Breakeven
-Allow the pullback to happen,
-If any warning signs appear, out when 9/20MA loss + nearby HTF level
-Loser
-Allow the pullback to happen
-Exit trade on next loss of significant level/area/9/20MA
The Partials
-Partials are taken after PT is hit, and either
-Extreme para move higher, sell 1min candle low break
-1min trend break lower and hold
-9MA on 1Hr loss
The Exit
-There are tons of different ways for me to exit my positions. Nearly all are labeled above. But to put it all together nice and neat in one spot they will all be listed here.
- Exiting for a loss same day
- Exiting for loss next day
- Exiting Early Intraday from warning signs
- Exiting 1st Partial
- Exiting Other Partials
- Exiting last of position
The Re Entry
-Just because I exit my position doesnt necessarily mean the trade is over!
-In order to re enter
- Sentiment must be in favor of bias
- Internals must be in favor of bias
- 9/20MA must be in favor on 1hr
- 9MA must be in contact with D candle on Daily
My next goal is to get this down to a notecard. Easy to read and undesrtand.
Essentially,
I am entering trades when sentiment is clear and I follow it.
Sentiment is unlikely to change and make me change my overall market bias from just 1 day.
So then Internals reflect how the market is following up on that.
So the Internals will tell me when an early exit is needed, or an add is needed.
-When to exit on a LOD break, or add on a LOD break.
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