Setting Swing Trading Goals

Swing trading goals are unique. You most likely have full-time job so the money is not required to pay the bills.

This means you will be in cash for the most part. If you aren’t, you are most likely trading for the action. This isn’t good.

Swing traders who earn big money are prepared. Traders who struggle react. Which are you planning to be in 2015?

Your desire to succeed is a necessity but it isn’t enough. Sure you need to work hard but you also need to adapt to changing market conditions.

The ability to adapt is a key to long-term success. Let’s discuss what adapting means so you can increase the odds of achieving your swing trading goals.

Why Swing Traders Need to Adapt to Succeed

It’s interesting. To meet your swing trading goals you need a strategy and the discipline to follow it. To be consistent you need to know when to adapt.

I know that sounds like a contradiction bit it’s not. Adapting doesn’t mean you must change your trading plan. Adapting means you need to understand when to step on the gas and when to slow down. It means learning when to be in cash and when to add aggressively to winning positions.

Inexperienced swing traders believe that following a strategy is a black and white process. When I say adapt I don’t mean change your strategy. I am implying you should adjust how you apply it.

One giant hurdle to overcome is believing every trade is the same. It’s simply not true. Some trades have higher probability and should be managed differently. To succeed in 2015 you need to know what these scenarios look like, so you are ready to make quality decisions. You need to prepare yourself with a decision making process before it happens.

The markets can quickly cloud your emotions when money is on the line, to reduce the odds of spur-of-the-moment decisions you need a checklist. Some ideas for a checklist include: market trend, sector trend, trend of similar stocks, volume, and liquidity, closeness of recent momentum or trading range (is the current price action over-bought or over-sold).

If you do not have 100% of your factors in your favor you should not be adding to positions. Yes 100%. This is what separates great traders from good. The greats follow the rules. Every great trader I have known says the same; “When I follow my rules I make money. When I break my rules I lose money.”

One thing to be clear about here, they are not talking about losing money on a trade-by-trade basis. They are talking about the consistency of their P&L.

Considerations for Swing Trading Planning

  • Will you trade a random selection of stocks based on a new catalyst or will you build a universe of stocks that meet your criteria and only trade the universe. (This implies all other ideas are off limits)
  • What percentage of risk capital will you risk per trade?
  • What trade entry technique will you employ? Will it be full size on entry or will you “work an entry?” Will you ever add to a losing trade as you work an entry or will you have strict parameters to only add to winning positions?
  • Will you trade long and short? Or are you only looking for patterns to be a buyer?
  • When will you scale out of trades? When will you add to trades? When will you exit on one piece? What are the conditions and signals you plan to use?
  • What specific entry signal will you look for? Will you use more than one? If so, how will you know which one to use?

Trading consistency comes from following your rules over time. It doesn’t come from the market. It comes from you. When your strategy and tactics have clarity, you will be in a good place.

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