experimental Trading Plan

This is a step-by-step Trading Plan for short to medium term swing trading in the Equities markets. This will be an ongoing project starting as a demo account. Every aspect of this will be experimental. This will start focused on trading the Wyckoff Method. Other aspects won’t be so important in the beginning. One of those “unimportant aspects” will be money management. For now, it will be kept to the K.I.S.S. principle. As the trading system becomes more fine-tuned, other asects of the Trading Plan will undergo some changes.

For now the details will be based on an account size of $25K only because this is what I heard is a minimum to trade the Equities markets effectively. This “minimum” will be one of the experiments as I go along as will different markets such as futures and options.

The Plan

First I’ll take a look at Market Risk to get a handle on money flow. This will help in evaluating trade direction in certain markets. If risk is appetite, I’ll look for the top performers for a long trade or visa versa for a risk aversion market.

Second, I’ll look at Sector performance.

Next will be a look at price and average volume.

At this level, I think this also gives me a price range between $10 and $50. Less than $10 is too close to being able to be manipulated like penny stocks. Up to $50 will leave flexibility for entries.

I’ll start by using 2% with a maximum of 5% when the Wyckoff Method calls for adding to a position – if it comes when I can be managing a trade. When adding to a position, I’ll keep it to 1% each time. I’ve chosen these numbers to keep risk low while still putting some pressure on testing the strategy. If this was a live account, I would have to stay at 1% and 2% with an untested system and little experience.

Volume needs to be at least 1 million daily average so I won’t have to
worry about liquidity.

Check the ROE.

Check its performance in the sector.

Check the daily for the trend.

On a VSA chart, find the last accumulation/distribution phase and analyze the base.

Check the PNF 1 & 3 point reversal chart counts for potential.

Then calculate the risk to reward ratio based on those PnF charts.

This is a good place for the Wyckoff “quick evaluation”:

Does the potential at the point of consideration warrant the move desired? Can a stop be properly positioned and still maintain at least the minimum acceptable profit/risk ratio?

This needs two charts: the VSA chart and the PNF chart.

Finally. It’s time to go through the nine buying/selling tests.

If the tests pass, hit the trigger.