Following these trading rules for swing trading allows us to maximise our overall gains while minimizing losses.

Position Sizing

• We generally hold 5 positions at any time.

Entry

• We enter every position with the total dollars allocated.
• We do not enter any position that gaps up more than 2% above an entry price. If this happens we will look at it on a daily basis and either issue a new entry price or void the trade.
• We place buy or sell orders based on trigger prices. Once we have 5 positions we generally sit tight and manage our open positions. When a position is stopped out we place our buy/sell order for the next one that triggers.
• When placing our entry stop limit orders. The stop price is our trigger price and we set the limit price a maximum of 1.5% above that. The limit price can also be set at the trigger price, this will keep you from entering some trades that move up slightly at the open but in the long run it does not affect the over all results. The 1.5% limit price assures us of entering a position that opens up and keeps us from getting in on stocks that gap up more than 2%. The limit price can be set at any price but should not be set higher than our recommended 1.5%.

Exit

• We allow our stops (informed by technical analysis) to exit our positions with the following additions:
• We exit a position on the day prior to earnings announcements.
• We sell half of the position if a stock moves in our direction by more than 10% in one day. Preferably on the same day as stocks that shoot up have a tendency to drop the following day.
• We do not wait to be proven wrong. We exit any position on the 5th day, if that position is not moving as expected based on our technical analysis.