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Using Options for Swing Trading


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Using Options for Swing Trading

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  #171 (permalink)
Chicago, Illinois
 
Experience: Intermediate
Platform: ThinkOrSwim
Broker: Tradingview
Trading: Stock, Penny Stock & occasionally Options
 
Bermudan Option's Avatar
 
Posts: 500 since May 2011
Thanks: 474 given, 271 received

Process

My Three Watchlists
  • Penny Stock - Sub $5 stock that are primed for an intraday breakout. High flyers but also they can lose +30% in a day.
  • Stock - Any +$5 stock primed for an intraday breakout
  • Backburner - Any priced stock that is setting up nicely but a day or too early from an ideal setup. Examples include a stock near all-time highs but overextended on the daily timeframe or a stock testing a key price level but stop placement would be too far away.


Intraday Routine
Typically I cycle between the following steps from the open -> market close:
  1. Monitor existing positions for signs to reduce risk. That can range from selling because of weakness or selling to lock in profits
  2. Monitor Penny or Stock watchlists for potential breakouts.
  3. Monitor Backburner watchlist for developing intraday setups (& move to the appropriate watchlist)


After-hours routine
  1. Review my open positions and place stops on any positions that are naked (ie trail stops that expired @ EOD)
  2. Review watchlists & triggered price alerts. Move setups to the appropriate watchlists/remove completely
  3. Add stand-out setups to the short list on my trading spreadsheet
  4. Use broker platform to scan for new set ups
  5. Upload Scanner results to charting platform for easier analysis
  6. Review set ups and post standout setups to my trading spreadsheet. (Looked at about 220 charts today)
  7. Step away from the markets and do something (anything) for at least and hour to clear my mind.
  8. With fresh eyes, revisit and rank the stand-out setups. For those with a passing grade, set contingency orders for the following trading day.


End of the Trading Week Routine
  1. During the week, I try to avoid P&L as much as possible and just trade the charts. During the weekend, I allow myself to look at P&L.
  2. Review my notes for the last week of trading
  3. Review some completed trades in TraderVue
  4. Run the scanner for +$15 stock (The results are so broad for this scan that I only use it weekly)


Trading Costs
Every month has at least $100 in trading-related costs. It is not breaking the bank, but it's worth defining the fixed costs:
  • $50/mo for Alphatrends Analysis - I rarely trade the suggested watchlist, but it is good to hear a professionals perspective when I've gotten overly bearish thanks to Covid and didn't listen to what the markets were saying.
  • $23.20/mo for TraderVue Journaling - This has paid dividends already in terms of avoiding future mistakes. I may try to create a trading dashboard on my own though.
  • $7.50/mo for my charting platform's Pro subscription - ThinkOrSwim offers free charting, but TradingView is just fluid AF and works well with my Chromebook and any other device I own, without any installation needed.
  • $8/mo for data feed - The free data isn't quite as reliable apparently. I'm usually a penny-pincher but if it saves me one bad trade, it was worth it.
  • Occasionally pay $13.90 round trip for OTC penny stock trades - Maybe 2-3 trades per week?

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  #172 (permalink)
Chicago, Illinois
 
Experience: Intermediate
Platform: ThinkOrSwim
Broker: Tradingview
Trading: Stock, Penny Stock & occasionally Options
 
Bermudan Option's Avatar
 
Posts: 500 since May 2011
Thanks: 474 given, 271 received

Process
My Watchlist Types
  • Penny Stock - Sub $5 stock that are primed for an intraday breakout
  • Stock/Options - All other stock with setups that look primed for an intraday breakout. Rarely are they option trades, so, like this thread, the word 'option' could probably be removed.
  • Backburner - This watchlist is for stock that are close to being on either of the other watchlists, but the stup isn't quite ready. Examples include a stock near all-time highs but overextended or a stock testing a key price levels but too far from a reasonable stop.

Intraday Routine
Typically I cycle between the following steps from the open -> market close. I am working on being productive doing other things because idle hands do the devil's work... and they also overtrade.
  1. Manage existing positions
  2. Monitor Penny watchlist or Stock/Option watchlist for potential entries
  3. Check Backburner watchlist for any setups worth upgrading to another watchlist

After-hours routine
  1. Review existing positions
  2. Place stops on any positions that are naked (ie no emergency exit plan due to an expired order)
  3. Review watchlists and intraday price alerts. Move setups to the relevant watchlists
  4. Move standout setups to a separate trading spreadsheet
  5. Use broker to scan for new set ups
  6. Upload scan results to charting platform
  7. Review set ups and post standout tickers to my trading spreadsheet. (Looked at about 220 charts yesterday)
  8. Step away from the markets and do something (anything) to mentally remove myself from trading
  9. The break should give me fresh eyes to review the stock I thought looked good earlier in the day. I set contingency orders for the worthwhile setups to be executed in the morning.

End of the Trading Week Routine
  1. As a rule, I try to avoid P&L and trade the charts. During the weekend, I allow myself to look at P&L.
  2. I jot down thoughts and strategies and ideas during the trading week and on the weekends I review my notes and tie up any loose ends.
  3. My typical scanner looks at sub $15 stock, or very highly traded stock of any price. On the weekend, I allow myself to also include a search for +$15 stock with a lower market cap (still a minimum of 1,000,000 shares daily volume though)

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