Back into the swing of swing trading?

Most of this post is from my day trading blog entry of today.

I am trying something a bit different, actually it is a medium term trade idea. I have accumulated a list of stocks that are reasonably big players that I see other traders trading intraday or these are used to gauge market sentiment. Either way they are fairly common and reasonably fluid issues.

I plan on putting all of these stocks (McDonalds, Morgan Stanley, General Electric, Dupont, Johnson and Johnson, 3M, etc.) on a page in my Esignal software. I am working on a script to monitor these for certain significant milestones and trends in order to do some swing trading and sector rotational style trading, perhaps a bit of hedging as well, perhaps capture some dividends while at it.

It would be fairly easy to even scroll through these one by one to watch for certain patterns and price positioning on a daily chart basis. I have been only trading full lots due to a restriction in Questrade that would not allow me to place a part lot stop loss. I figured that, seeing as the stop loss was a market restriction altogether, I should try a partial lot stop loss in the NYSE...surprise surprise! I am able to stop loss partials, so it had nothing to do with Questrade at all.

Now I will be trading in my TFSA using part lots of various companies with appropriate stops in place for each. I may even let them trickle into my other accounts if I can keep enough capital free for daytrading...although even there I could use smaller position sizing as the main restriction I have been considering was having to use lots of 100 shares which can, in slumps or testing periods, draw my account down. Live and learn.

Today I bought McDonalds (MCD) due to the significant 200DMA test. It was not ideal but I wanted to place with an order setup and test the stop loss order entry. I placed a limit order lower than my eventual entry which I should have just left in play. Due to impatience I replaced it with a market order, only to see the price drop 20 cents shortly afterward. Unlike day trading a drop of 20 cents in a medium term trade means next to nothing as my stop loss is a full $1 away. I sort of wanted to be in the trade today even though I likely could have gotten a better price tomorrow.

I think that I will apply trend in process trading, like swing trading, and skip the counter trend stuff altogether. At the very least I will choose position sizing to suit the risk of the trade, at least for my loss allowance.

Entry points will likely be determined by entering the trade at the previous day close price or better. This saves trying to decide when to trade during the day, set a limit order at the open for this point unless it is plainly obvious off the start that I may get a better price. These are not to be time intensive trading decisions during the day. Shorting will not be involved at this point either.

Basically, a work in progress.

Jeff.