Swing Traders Checklist

This is a checklist that I developed for new swing traders. You can use it to help you find profitable stocks to trade. Or, you can use it to develop your own trading strategy.

Market Timing

Use the S&P 500 to time your trades to the market with Williams %R. Only establish new positions when one of the following conditions occurs.

Moving Averages: For long positions, the 10 SMA must be above the 30 EMA. For short positions, the 10 SMA must be below the 30 period EMA.

Williams %R: Set Williams %R at a 3 period setting. Oversold is less than -80. Overbought is more than -20

Long Positions: The 10 SMA is above the 30 EMA and Williams %R is oversold - BUY

Short Positions: The 10 SMA is below the 30 EMA and Williams %R is overbought - SHORT

Hourly Chart: Look at the hourly chart on the S&P 500 for bullish or bearish patterns.

Supplemental: Look at the VIX to identify extreme market readings.

Note: Only use this market timing method to establish new positions – not to exit positions. Trail your stops on individual stocks to exit positions.

Selecting Individual Stocks

This is for long positions only.

Trend: The trend is up with the 10 SMA above the 30 EMA. The stock is in between the 10 SMA and 30 EMA (Traders Action Zone). This stock is in a stage 2 uptrend.

200 SMA: The stock is above the 200 period simple moving average.

Pullback: The stock has at least 3 consecutive down days with lower highs.

Candlestick Pattern: The stock has a bullish candlestick pattern for today (hammer, engulfing, piercing), and/ or traded over the high of the previous day.

Hourly Chart: The hourly chart matches your expectations on the daily chart.

Earnings: The stock is not coming out with an earnings release within the next couple of days.

Support Level: This stock is trading at a support level.

Management

This is for managing your money and your trades.

Money Management: Do not risk more than 2% of your money on any one trade. Use this number to determine how many shares you should buy.

Trade Management: For swing trades, trail your stops under the current days low or the previous days low – whichever is lower. If the stock is at the beginning of a trend, consider selling only ½ of your position when stopped out. Trail your stops on the remaining shares under swing point lows until stopped out.

Trading Tips

First Pullback: The first pullback after a significant event (breakout, trend line break, etc.) will offer you the best trading opportunity.

Price Action: The degree to which a stock moves into the prior days range determines the significance of the move.

Here is an example trade:

Right click on this link to download and save this checklist to your computer.