PRESENTS

SWING TRADE PRO 2.0

THE 5-STEP SWING TRADING BLUEPRINT
with Frank Ochoa
President and Founder, PivotBoss, LLC
Author, Secrets of a Pivot Boss
 THE 5-STEP SWING TRADING BLUEPRINT
RISK MANAGEMENT > TRADE SEQUENCES > STRATEGY TOOLKIT > EXECUTION > DOCUMENTATION
SWING TRADE PRO 2.0
THE 5-STEP “Those traders who have confidence in their own trades, who trust themselves to do
what needs to be done without hesitation, are the ones who become successful. They
SWING TRADING no longer fear the erratic behavior of the market. They learn to focus on the information
that helps them spot opportunities to make a profit, rather than focusing on the

BLUEPRINT information that reinforces their fears.”

— Mark Douglas, Trading in the Zone
1. Risk Management | Set your
risk parameters
Swing Trade Pro 2.0: The 5-Step Swing Trading Blueprint is a powerful 5-part
course that is designed to teach you how to execute high probability swing trades in
2. Trade Sequences | Find the markets you wish to engage.

trading opportunities

3. Strategy Toolkit | Choose a Swing Trade Pro 2.0 offers a universal approach to engaging any market and any
trading strategy
timeframe as a participant, whether you trade stocks, ETFs, futures, forex, or
cryptocurrencies, or whether you’re trading daily bars, hourly bars, or intraday.

4. Execution | Execute the

strategy
This training is also platform agnostic, which means we are delivering a blueprint that
5. Documentation | Document can be traded with the platform you’re currently using.
and review the results
 THE 5-STEP SWING TRADING BLUEPRINT
RISK MANAGEMENT > TRADE SEQUENCES > STRATEGY TOOLKIT > EXECUTION > DOCUMENTATION
SWING TRADE PRO 2.0 1. Risk Management: You will learn how to assess your risk tolerance, how to calculate core
equity, trade allocation, and max portfolio risk for various account sizes. You will also learn how
THE 5-STEP and when to adjust your level of risk exposure, and how to use the Risk Management Matrix.

SWING TRADING
2. Trade Sequences: You will learn how to identify and trade five Day Type Blueprints and four
Trade Sequences. These blueprints and sequences will help you recognize important days in
the market, so you will know how to engage them, including identifying each absorption zone,
BLUEPRINT multiple entry points, and failure points.

1. Risk Management | Set your 3. Strategy Toolkit: You will learn about the various options strategies in our Strategy Toolkit,
and how to choose the right strategy for the trading opportunity presenting itself. The Strategy
risk parameters

Toolkit is designed to allow you to choose trading strategies that are categorized by their
2. Trade Sequences | Find relative risk profiles, thus allowing you to pick the type of risk that you’re willing to take relative
trading opportunities
to the probability of profit for the opportunity you’re considering trading.
3. Strategy Toolkit | Choose a 4. Execution: You will learn five execution techniques and how to use them to execute entries
trading strategy
and manage positions in the market, including scaling into and scaling out of positions
4. Execution | Execute the according to the technique and risk exposure you choose to execute.
strategy
5. Documentation: You will learn how to document your trades and experiences in the market,
5. Documentation | Document including documenting entries, exits, and trade results. Additionally, documentation allows you
and review the results to review past performance so that you can identify and improve upon weaknesses, while
identifying and building upon strengths.
 PRESENTS

SWING TRADE PRO 2.0

THE 5-STEP SWING TRADING BLUEPRINT
STEP 1: RISK MANAGEMENT
 RISK MANAGEMENT:
SET YOUR RISK PARAMETERS
SWING TRADE PRO 2.0 "If you are unable to trade without the slightest bit of emotional discomfort (specifically, fear), then you
have not learned how to accept the risks inherent in trading. This is a big problem, because to whatever

1. RISK degree you haven’t accepted the risk, is the same degree to which you will avoid the risk. Trying to
avoid something that is unavoidable will have disastrous effects on your ability to trade successfully.”
— Mark Douglas, Trading in the Zone

MANAGEMENT Set Your Risk Parameters

SET YOUR RISK PARAMETERS Step 1 of our 5-Step Blueprint is Risk Management, wherein you’ll learn how to define your personal
1.1 Equity Model Calculation risk parameters, from trade allocation to max portfolio heat. Each trader has a different risk tolerance,
and it is important that you fully understand your own risk tolerance so that you may define the risk
1.2 Trade Allocation Model that you are willing to take for a given opportunity. You will also learn how to navigate among various
levels of risk exposure as the odds of profitability for opportunities increase or decrease.

1.3 Percent of Trade Allocation

1.4 Portfolio Heat Assess Your Risk Profile:

1.5 Risk Management Matrix • Conservative: A conservative trader focuses on capital preservation and growth, and looks to
produce income trades while limiting risk.

• Moderate: A moderate trader focuses on growth and looks to increase and decrease risk exposure
according to the odds of profitability for a given opportunity.


• Aggressive: An aggressive trader seeks to rapidly grow an account, and will place directional bets
under the most favorable circumstances, increasing exposure as odds increase.
 RISK MANAGEMENT:
EQUITY MODEL CALCULATION
SWING TRADE PRO 2.0 Before putting your money at risk, you must first outline how you intend to manage risk. In essence,
you must first set your risk parameters before executing trades. In this section, you will learn how

1. RISK to calculate tradable equity so you can begin determining your preferred trade allocation. We will
use the Core Equity Model to calculate tradable equity.

MANAGEMENT Core Equity Model: The value of your account equity is determined by the amount of cash in your
account less the risk amount allocated for each open position. Equity is only added back after
closing a position. Use this model to determine how much of your account to risk for each position.

SET YOUR RISK PARAMETERS

1.1 Equity Model Calculation CORE EQUITY EXAMPLE:

1.2 Trade Allocation Model TOTAL EQUITY $50,000

1.3 Percent of Trade Allocation TRADE 1 RISK ALLOCATION (1%) $500 (50,000 x 1%)

1.4 Portfolio Heat

REMAINING CORE EQUITY $49,500 (50,000 - 500)
1.5 Risk Management Matrix
TRADE 2 RISK ALLOCATION (1%) $495 (49,500 x 1%)

REMAINING CORE EQUITY $49,005 (49,500 - 495)

TRADE 3 RISK ALLOCATION (1%) $490 (49,005 x 1%)

REMAINING CORE EQUITY $48,515 (49,005 - 490)

 RISK MANAGEMENT:
TRADE ALLOCATION MODEL
SWING TRADE PRO 2.0 Trade Allocation determines how much you’re willing to risk for a given trade. The Trade Allocation
Model that we will use is the Fixed Risk Model, which allows traders to control position size as a

1. RISK percentage of Core Equity.

Fixed Risk Model (AKA Fixed Fractional Model): This model involves controlling position size as a

MANAGEMENT
percentage of core equity.

The following statistics are based on trade simulations performed by Dr. Van Tharp in his book Van
SET YOUR RISK PARAMETERS Tharp’s Definitive Guide to Position Sizing Strategies, which gives you a basic understanding of the
risk profiles associated with the various percentages:
1.1 Equity Model Calculation
•0.8% Fixed Risk: Returned a chance of ruin of only 0.1% and a meager 0.4% chance of reaching
1.2 Trade Allocation Model 300% profit objective on 100k account over the first 100 trades
1.3 Percent of Trade Allocation • 1.2% Fixed Risk: Returned less than a 1% chance of ruin and a modest 8.5% chance of reaching
1.4 Portfolio Heat 300% profit objective on 100k account over the first 100 trades

1.5 Risk Management Matrix • 2.6% Fixed Risk: The optimal retire/ruin ratio is risking 2.6%, based on 10,000 100 trade
simulations. With this percentage, there is a 53.9% chance of reaching a profit of 300% over 100
trades, and a 12.3% chance of ruin, which was defined as a 25% loss of starting equity 


• 3.6% Fixed Risk: Returned the greatest probability of reaching +300% objective (60.3% chance),
with a 22.6% chance of ruin (-25%) 


• 4.6% Fixed Risk: Returned the highest Median Gain percentage gain (+545.5%), with a 58.2%
chance of success (+300%), and a 31.7% chance of failure (-25%)
 RISK MANAGEMENT:
TRADE ALLOCATION MODEL
SWING TRADE PRO 2.0 Depending on your Core Equity, you’ll want to adjust the Fixed Risk Model to fit your risk profile
and account goals.

1. RISK For account sizes above $25,000, look to use more of a “conventional” approach to the Fixed Risk
Model, which generally includes limiting position sizing to between 1% and 3% of core equity. This

MANAGEMENT becomes more important as you approach, or exceed, equity of $100,000.

For account balances less than $25,000, you may want to be more aggressive, as shown below:

SET YOUR RISK PARAMETERS

1.1 Equity Model Calculation FIXED RISK MODEL EXAMPLES:

1.2 Trade Allocation Model CORE EQUITY > $25,000

— 1.0% Fixed Risk Trade Allocation (CONSERVATIVE)

1.3 Percent of Trade Allocation — 1.5% Fixed Risk Trade Allocation (MODERATE)

1.4 Portfolio Heat — 2-3.0% Fixed Risk Trade Allocation (AGGRESSIVE)

1.5 Risk Management Matrix EXAMPLE: $150,000 (CORE EQUITY) x 1.5% (MODERATE) = $2,250 Trade Allocation

CORE EQUITY < $25,000

— 2.5% Fixed Risk Trade Allocation (CONSERVATIVE)

— 5.0% Fixed Risk Trade Allocation (MODERATE)

— 10.0% Fixed Risk Trade Allocation (AGGRESSIVE)

EXAMPLE: $10,000 (CORE EQUITY) x 10.0% (AGGRESSIVE) = $1000 Trade Allocation

 RISK MANAGEMENT:
TRADE ALLOCATION MODEL
SWING TRADE PRO 2.0 In this section, you will learn how to increase or decrease the level of exposure to the
market for a trade based on the odds of profitability of the opportunity presenting itself.

1. RISK Level of Exposure refers to the amount of risk capital that is exposed to the market for a

MANAGEMENT
given opportunity. Ideally, you want to increase the level of exposure for opportunities with
higher odds of success, and look to decrease the level of exposure for opportunities with
lower odds of success.

SET YOUR RISK PARAMETERS

Depending on the odds of success and your desired level of exposure, you can execute
1.1 Equity Model Calculation
entries into positions conservatively, moderately, or aggressively.

1.2 Trade Allocation Model

1.3 Percent of Trade Allocation ODDS-BASED TRADE ALLOCATION:

1.4 Portfolio Heat ACCOUNT SIZE > $25,000

1.5 Risk Management Matrix — 1.0% (CONSERVATIVE): For trades with good odds of success

— 1.5% (MODERATE): For trades with high odds of success

— 2-3.0% (AGGRESSIVE): For trades with the best odds of success

ACCOUNT SIZE < $25,000

— 2.5% (CONSERVATIVE): For trades with good odds of success

— 5.0% (MODERATE): For trades with high odds of success

— 10.0% (AGGRESSIVE): For trades with the best odds of success

 RISK MANAGEMENT:
PERCENT OF TRADE ALLOCATION
SWING TRADE PRO 2.0 Percent of Trade Allocation allows you to systematically scale into a position using a
percentage of overall trade allocation. This entry allocation technique gives you a powerful

1. RISK approach to controlling the amount of overall trade allocation that will be exposed to the market
at the outset of a trade, and then looking to reward winning trades with additional exposure.

MANAGEMENT Again, depending on the odds of success for an opportunity and your desired level of exposure,
you can allocate conservative, moderate, and aggressive trade allocations, but choose to scale
SET YOUR RISK PARAMETERS into these positions with a bit more conservatism.

1.1 Equity Model Calculation ENTRY ALLOCATION:

1.2 Trade Allocation Model
• Good Odds — 1.0% FIXED RISK (CONSERVATIVE)
1.3 Percent of Trade Allocation — Scale into 33% of 1% Trade Allocation (CONSERVATIVE)

1.4 Portfolio Heat — Scale into 50% of 1% Trade Allocation (MODERATE)

— Scale into 100% of 1% Trade Allocation (AGGRESSIVE)

1.5 Risk Management Matrix • High Odds — 1.5% FIXED RISK (MODERATE)
— Scale into 33% of 1.5% Trade Allocation (CONSERVATIVE)

— Scale into 50% of 1.5% Trade Allocation (MODERATE)

— Scale into 100% of 1.5% Trade Allocation (AGGRESSIVE)

• Best Odds — 2-3.0% FIXED RISK (AGGRESSIVE)

— Scale into 33% of 2.6% Trade Allocation (CONSERVATIVE)

— Scale into 50% of 2.6% Trade Allocation (MODERATE)

— Scale into 100% of 2.6% Trade Allocation (AGGRESSIVE)

 RISK MANAGEMENT:
PORTFOLIO HEAT
SWING TRADE PRO 2.0
1. RISK In this section, you will learn how to calculate the amount of capital that is at risk for a
portfolio. This metric is called Portfolio Heat.

MANAGEMENT Portfolio Heat (or Total Heat): The total amount of capital at risk for a portfolio, which
SET YOUR RISK PARAMETERS includes the amount at risk for each open position.

1.1 Equity Model Calculation

Max Portfolio Heat: The maximum amount of capital that can be simultaneously at risk
1.2 Trade Allocation Model for a portfolio. Max Portfolio Heat is often presented as a percentage of Total Equity.

1.3 Percent of Trade Allocation • Designed to limit the effects of price shocks that a portfolio can experience
1.4 Portfolio Heat when leverage and exposure is high

1.5 Risk Management Matrix • Designed to limit the effects of price shocks that a portfolio can experience
when flash crashes occur

• The amount of portfolio heat you use should depend on the quality of the
system, opportunities present, and the experience of the trader
 RISK MANAGEMENT:
PORTFOLIO HEAT
SWING TRADE PRO 2.0
Limiting Portfolio Heat is extremely important, which helps to avoid ruin during flash

1. RISK crash events and periods of high volatility. Here’s how to calculate Max Portfolio Heat
for various account sizes:

MANAGEMENT Max Heat by Account Size:

SET YOUR RISK PARAMETERS — Account Size > $25,000: 10-15% Max Heat

— Account Size < $25,000: 20-30% Max Heat

1.1 Equity Model Calculation

1.2 Trade Allocation Model EXAMPLE 1: Account Size = $100,000 @ 10% Max Heat
1.3 Percent of Trade Allocation
— Max Portfolio Heat = $10,000 ($100,000 x 10% = $10,000)

1.4 Portfolio Heat — Trade Allocation Model @ 1.5% = $1,500 ($100,000 x 1.5%)

1.5 Risk Management Matrix — Total Number of Positions = 6 ($10,000 / $1,500 = 6.6 Positions)

EXAMPLE 2: Account Size = $5,000 @ 20% Max Heat

— Max Portfolio Heat = $1000 ($5,000 x 20% = $1,000)

— Trade Allocation Model @ 5% = $250 ($5,000 x 5%)

— Total Number of Positions = 4 ($1,000 / $250 = 4 Positions)

 RISK MANAGEMENT:
RISK MANAGEMENT MATRIX
SWING TRADE PRO 2.0 The Risk Management Matrix incorporates and automates the sections that we’ve
covered in Step 1: Risk Management, including using Core Equity to calculate
1. RISK conservative, moderate, and aggressive Trade Allocations.

MANAGEMENT
Populate the yellow cells with your preferred risk management parameters, and allow
the spreadsheet to calculate your customized risk management matrix.

SET YOUR RISK PARAMETERS The matrix is designed to provide accuracy, speed, and efficiency in calculating trade
1.1 Equity Model Calculation allocations and risk management controls in real time as you trade.

1.2 Trade Allocation Model

1.3 Percent of Trade Allocation
1.4 Portfolio Heat
1.5 Risk Management Matrix
 PRESENTS

SWING TRADE PRO 2.0

THE 5-STEP SWING TRADING BLUEPRINT
STEP 1: RISK MANAGEMENT
 PRESENTS

SWING TRADE PRO 2.0

THE 5-STEP SWING TRADING BLUEPRINT
STEP 2: TRADE SEQUENCES
 TRADE SEQUENCES:
FIND TRADING OPPORTUNITIES
SWING TRADE PRO 2.0 Step 2 of our 5-Step Blueprint introduces Day Type Blueprints:

2. TRADE
Trade Sequences, which help traders find
and trade opportunities in the market. You’ll — Rejection Day Blueprint

learn how to identify and trade specific day

SEQUENCES types and multiple-day trade sequences

using blueprints that detail every absorption
zone, entry point, and failure point.

— Absorption Day Blueprint

FIND TRADING OPPORTUNITIES — Failed New Low Blueprint


The Day Type blueprints are designed to help
2.1 Day Type Blueprints you identify and execute entries for single — Outside Day Blueprint

2.2 Trade Sequences sessions that are statistically important in the
market, while Trade Sequences string — Stop Run Day Blueprint

together several day types in a row that will
collectively fuel the next move.
Trade Sequences:
These blueprints are designed to help you
find high probability opportunities in any
— Rejection Day Sequence

market and in any timeframe, and come with

specific guidelines for executing and building — Stop Run Sequence

positions. Thoroughly understanding these

blueprints will give you the power to — Failed Absorption Sequence

confidently execute trades in any market

when the opportunity strikes. — Accumulation Sequence
 REJECTION DAY BLUEPRINT
The Rejection Day is a significant day type that tends to precede powerful reversals.
SWING TRADE PRO 2.0 Absorption days typically follow this day type, which fuel the developing reversal.
ENTRY 2: Secondary entry is a retest of the
Rejection Day’s high/close from above, which
BACKGROUND can be defended 1-2 days after rejection
HIGH
MEASUREMENTS
• Rejection Days develop at CLOSE
1. RANGE > greater than average,
ie: > 125% ADR

price extremes — ie: previous

highs and lows
2. TAIL > ideally greater than 2.5 x
BODY BODY size

• Rejection Days have a range

3. CLOSE is usually in the upper
that is significantly larger than 35% of the day’s RANGE

the 10-day average

4. MID: ((H+L)/2) = Ideal Swing
• The ideal swing entry is the RANGE Entry; price must remain above
Rejection Day midpoint, this level in order for the
MID TAIL rejection day sequence to
which can be defended for
1-4 days after the rejection
remain intact

5. LOCATION: Powerful when

• A daily close below the ENTRY 1: The ideal entry point for swing paired with market structure,
Rejection Day midpoint trades is the Rejection Day midpoint to the previous lows, and low volume
breaks the pattern, as this rejected lows, which can be defended 1-4
nodes (LVNs)

days after rejection, UNLESS a daily close

would indicate a retest of the occurs below this level 6. ENTRIES: Ideal entry is MID on
Rejection Day low Day 1, or just before the Close
on the day of rejection. On Day
2+, price must OPEN > MID [1]
LOW for entry to be considered at MID
*Flip for bearish blueprint
 DAY TYPE BLUEPRINTS
REJECTION DAY
The Rejection Day day type is a powerful pattern that can
precede significant reversals in price. The primary objective
during this day type is to confirm the rejection by the end of the
day, with the option to enter a position (full or partial) at some 1st Entry Opportunity:
point during the day, usually in the last hour of the session. If the Rejection Day is
confirmed by the end of
the day, you have the
option to execute an
entry during the last
hour of the day.

2nd Entry Opportunity:

If the Rejection Day is confirmed

by the end of the day, you have
the option to execute an entry at Rejection Day:
the Absorption Zone the next day Significant Rejection
Day develops at critical
support at 160, which
suggests a bounce into
our forecasted target
zone of 170 to 173
 ABSORPTION DAY BLUEPRINT
The Absorption Day is typically a range bound day that is designed to facilitate trade
SWING TRADE PRO 2.0 between market participants. This day type fuels the forthcoming move.

BACKGROUND HIGH MEASUREMENTS

• Absorption Days develop after 1. RANGE < average daily range,
significant rejection or ie: < 75% ADR

expansion days
2. CLOSE > rejection day or
• Absorption Days typically have RANGE expansion day midpoint, and
small price ranges, which offers is usually > OPEN

two-way trade for market 3. LOW near rejection day or

participants
expansion day midpoint

• Absorption Days are days yMID LOW

4. LOCATION: tends to develop
when bets are being placed, as after rejection or expansion
ENTRY 2: Secondary
market participants are eager entry is a rejection of
days; can oftentimes be an
to position themselves ahead the Absorption Day’s Inside Day

of the next move

low the next session 5. ENTRIES: Ideal entry is the
• An Absorption Day can develop ENTRY 1: The ideal entry point for midpoint of the rejection day
by itself, or in a series of days, swing trades is the Rejection Day (yMID), but price must OPEN
before building enough energy midpoint, which can be defended > yMID for entry to be
1-4 days after rejection, UNLESS a considered. Several rotations
to fuel the next move
daily close occurs below this level
into the trigger zone can occur
• Failed Absorption usually leads
during an absorption day type
to significant stop run days
*Flip for bearish blueprint
 DAY TYPE BLUEPRINTS
ABSORPTION DAY
The Absorption Day is a day that facilitates trade
among market participants, allowing them to position
themselves ahead of the next potential move. Use this
day to trigger entries at the ideal trade location, which
is usually the midpoint of any rejection day. This zone
may see absorption for several days, and a daily close
below this zone will tend to lead to a long liquidation.
Absorption Day:

Ideally, an absorption day will

develop after a significant
rejection day. This day will allow
you to enter trades at favorable
trade location before the
reversal begins to take shape.
In this case, bulls defend the
Absorption Zone at 160.
2nd Entry Opportunity:

Look to execute an entry

at the rejection day
midpoint the morning after
rejection. This can be a
partial or full position entry.
Primary Absorption Zone CLVN

Developing Day:

When executing an entry during an absorption day at the

rejection day midpoint, the day’s bar will be incomplete and
appear “bearish”, but ideally will close the day higher.
 DAY TYPE BLUEPRINTS
KEYS TO GOOD REJECTION DAYS
Rejection Days are significant days in the market,
but not all rejection days are created equal.
Several keys to a good rejection day are the
significance of the rejection and the level being
rejected, how price responds to the absorption
zone, and the ability to make quick profits.

3. Taking Profits: Price

continues higher day after
day; no stalling. After price
rallies and hits the forecasted
target zone, look to take
profits, either partial or full,
depending on your plan.

2. Ideal Entry:

Price rallies after bulls

defended the rejection
day midpoint on Day
2, which offered ideal
1. Significant Rejection Day:
trade location with
The significance of the rejection day combined with minimal adverse
the significance of the key level (160) fueled this trade excursion
 FAILED NEW LOW BLUEPRINT
The Failed New Low day types can both trigger reversals and be part of continuation
SWING TRADE PRO 2.0 patterns. These day types are usually traps to generate more fuel for the existing trend.

ENTRY 2: Ideal swing entry is to defend the

BACKGROUND Failed New Low midpoint, which can be
defended 1-2 days after rejection, UNLESS
ENTRY 1B: Partial/full entries
can be made before the Close
of the rejection day if price
MEASUREMENTS
• Failed New Low day types a daily close occurs below this level closes above yMid. 1. RANGE = average daily range,
begin with strong rejection at ie: 75-100% ADR

a previous day’s low, or at HIGH 2. LOW < previous session’s low,

multiple-day lows
CLOSE and sometimes below multi-
day lows

• After rejection, the previous

yMID 3. CLOSE > previous session’s
low (or the rejected level),
midpoint in ideal situation

becomes the primary

4. LOCATION: can trigger
absorption zone for entries
MID
powerful reversals when paired
• Ideally, price will close above
PRIMARY with previous highs/lows and
the previous session’s yLO ABSORPTION CLVNs, and can also fuel a
midpoint, which would ZONE powerful continuation leg within
suggest a strong rejection
an already established trend

• These days can oftentimes LOW 5. ENTRIES: Ideal day trading

precede significant moves in entry is yLO on Day 1, and at
the market, and can initiate a ENTRY 1: Ideal day trading entry is to watch for the close for swing trades. On
trend or fuel one failed range expansion below previous lows. Look Day 2, price must OPEN > MID
to defend previous lows from above after rejection [1] for entry to be considered at
the midpoint of the FNL
*Flip for bearish blueprint
DAY TYPE BLUEPRINTS The Failed New Low day type oftentimes precedes
FAILED NEW LOW powerful reversals. The primary objective during this day
type is to confirm the rejection by the end of the day, with
the option to enter a position (full or partial) at some point
during the day, usually in the last hour of the session.

1st Entry Opportunity:

If the FNL is confirmed
by the end of the day,
you have the option to
execute an entry during
the last hour of the day.
2nd Entry
Opportunity:

If the FNL is
confirmed by the
end of the day,
you have the
option to execute
an entry at the
Absorption Zone
on Day 2

Failed New Low: Significant

multiple-day failed new low
develops, which suggests a major
short squeeze may be ahead, with
targets between 185 and 191
 DAY TYPE BLUEPRINTS
FAILED NEW LOW
The morning after a Failed New Low develops, look
to execute a position, full or partial, at the rejection
day midpoint. An Absorption Day (or at the very least
a morning of absorption) typically develops after
rejection, which will allow for ideal trade location.

Absorption Day:
2nd Entry
Ideally, an absorption day will develop Opportunity:

after a significant rejection day. This Look to execute an

day will allow you to enter trades at entry at the FNL
favorable trade location before the midpoint the
reversal begins to take shape. morning after
rejection. This can
be a partial or full
position entry.

Developing Day:

When executing an
entry during an
absorption day at
the FNL midpoint,
the day’s bar will be
incomplete and
appear “bearish”,
but ideally will close
the day higher.
 DAY TYPE BLUEPRINTS
FAILED NEW LOW
The Failed New Low day type is a powerful pattern that can
fuel short term and long term moves alike. Under the right
circumstances, look to engage this pattern more aggressively.

Taking Profits: After

price rallies and hits your
forecasted target zone,
look to take profits, either
partial or full, depending
on your plan.

Ideal Entry:

Price rallies after

the bulls defended
the FNL midpoint
on Day 2, which
offered ideal trade
location with
minimal adverse
excursion

High Odds Trade:

When a FNL
develops after a
range compression,
explosive moves
can occur
 OUTSIDE DAY BLUEPRINT
The Outside Day is a day type that powerfully illustrates rejection, stop runs, and
SWING TRADE PRO 2.0 shakeouts. This is a significant day type that oftentimes precedes a strong reversal.
ENTRY 2: Secondary entry is a

BACKGROUND retest of the previous high to the

Outside Day close, which can be
defended 1-2 days after rejection
CLOSE
HIGH MEASUREMENTS
• Outside Days develop at price 1. RANGE > greater than average,
ie: > 105% ADR

extremes — ie: previous highs yHI

and lows
2. LOW < the previous session’s
low, which is forcefully rejected

• Outside Days have a range

3. CLOSE > the previous session’s
that is larger than average, high, which completes the
making the day more outside day rejection pattern

statistically significant
4. MID: ((H+L)/2) = Ideal Swing
• The ideal swing entry is yLO, Entry; price must remain above
but can also be the Outside this level in order for the outside
Day midpoint
day sequence to remain intact

yLO 5. LOCATION: Powerful when

• A daily close below the
ENTRY 1: Ideal entry is between the Outside RANGE paired with market structure,
Outside Day midpoint breaks Day midpoint and the price level that was previous lows, and low volume
the pattern, as this would rejected (usually a previous low), which can be nodes (LVNs)

indicate a retest of the defended 1-4 days after rejection, UNLESS a

6. ENTRIES: Ideal entry is yLO on
daily close occurs below this zone
Outside Day low Day 1, or just before the Close
on the day of rejection. On Day
2+, price must OPEN > MID [1]
LOW for entry to be considered
*Flip for bearish blueprint
 DAY TYPE BLUEPRINTS
OUTSIDE DAY
The Outside Day rejection day type is a powerful pattern that
can precede significant reversals in price. The primary objective
during this day type is to confirm the rejection by the end of the
day, with the option to enter a position (full or partial) at some
point during the day, usually in the last hour of the session.
Outside Day:

1st Entry Opportunity: If the

An outside day rejection develops after price
Outside Day is confirmed by the
takes out multi-day lows and then rallies to close
end of the day, you have the option
above the previous session’s high price. This
to execute an entry during the last
rejection, especially after developing within a price
hour of the day, either full or partial.
compression, suggests a rally may be ahead.

Secondary
Absorption Zone

Primary Absorption Zone

2nd Entry Opportunity:

If the Rejection Day is confirmed

by the end of the day, you have
the option to execute an entry at
the Absorption Zone on Day 2
 DAY TYPE BLUEPRINTS
OUTSIDE DAY
Outside Day day types have multiple entry points,
allowing traders to enter a various points during the life
cycle of the rejection. These entries can be standalone
trades, or can be used together to build a position.

2nd Entry Opportunity:

Look to execute an entry upon a retest of the

rejection day high/close price the next morning.

3rd Entry Opportunity:

Price rejects yLO at the
secondary absorption
zone, providing a third
entry opportunity

1st Entry Opportunity:

Execute an entry upon a
failure at yLO or during the
last hour of the rejection day
 DAY TYPE BLUEPRINTS
OUTSIDE DAY
After a day of rejection, and a couple of days of
absorption, look to take profits after the first major
rally into your forecasted target zone. These pops
in your favor are designed for you to pay yourself
after building a position, so take advantage of the Taking Profits:
After price rallies
move by taking either partial or full profits.
and hits your
forecasted target
zone, look to take
profits, either
partial or full,
depending on
your plan

Absorption Zone:

The Outside Day

rejection will
remain intact until
price can no
longer sustain a
daily close above
the nearest
Outside Day absorption zone.
Absorption Day/
Failed New Low
 STOP RUN DAY BLUEPRINT
The Stop Run Day is an aggressive trend day that can lead to some of the most
SWING TRADE PRO 2.0 powerful days in the market. Absorption days help fuel these days.
STOP RUN

BACKGROUND CLOSE
DAY TARGET HIGH MEASUREMENTS
• Stop Run Days are price- ENTRY 2: Acceptance above previous
highs triggers the stop run. Look to defend
1. RANGE > greater than
discovery phases that tend to retests of yHI from above. This entry can average, ie: > 200% ADR

trend at an aggressive pace

double as a day trade, or can be used 1-2 2. LOW: oftentimes the low can
• Stop Run Days tend to be the days for a swing trade, UNLESS a daily
close occurs below this level
coincide with rejection, ie:
failed range expansion

biggest days in the market, TARGET: Take the developing stop run
with daily ranges exceeding day’s range below yHI and forecast
3. CLOSE > previous session’s
200-300% of average range
this measurement higher from yHI high (for longs) and usually
RANGE closes in the upper 10-15% of
• Stop Run Day Target: take yHI MID the day’s range

today’s range below yHI and

4. MID >= recent multiple-day
forecast it above yHI for a
highs/resistance (for longs)

reliable, high odds target

5. LOCATION: usually develops
• The day after a Stop Run day after rejection and/or
tends to be a countertrend absorption; powerful when
fade day, which usually sees paired with CLVNs

price return to the Stop Run 6. ENTRIES: Ideal entry is yLO on

day midpoint yLO Day 1. On Day 2, price must
ENTRY 1: Ideal entry is to watch for OPEN > MID [1] for entry to be
failed range expansion at yLO. Look to
LOW
considered at yHI/MID[1]
*Flip for bearish blueprint defend yLO from above after rejection
 DAY TYPE BLUEPRINTS Taking Profits: After
price rallies and hits your
STOP RUN DAY forecasted SRD target,
The Stop Run Day is the most aggressive trend look to take profits on
day the market has to offer. The primary objective the entire trade if it’s a
is to confirm the day as early as possible, usually day trade, and take
in the intraday timeframe, and then look to profits on half the
position if it’s a swing, Absorption Zone: The
execute an aggressive position to take advantage absorption zone will continue
with the intention of
of the day’s forecasted price range, and the adding back the next day to remain bid until the market
subsequent swing move to come. The Stop Run sees a daily closing price
Day can be traded as a day or swing position. below this zone
Stop Run Day Target:
(yHI - L) ~= yHI + (yHI - L)
Absorption Zone

2nd Entry Opportunity: If the SRD closes in the upper 20%

of the day’s range, then a 2nd entry opportunity presents
itself upon a retest of the absorption zone on Day 2
1st Entry Opportunity: If the SRD is confirmed early in the
day, look to execute an entry at/near the breakout point
(usually yHI). This can be a partial or full entry, but look to
Stop Run Day:
be more aggressive on this type of day if confirmed.
The Stop Run Day is an
aggressive trend day that
can lead to some of the
most powerful days in the
market. Rejection days
and Absorption days help
fuel these days.
 THE REJECTION DAY SEQUENCE
This blueprint illustrates the Rejection Day trade sequence, including identifying key
SWING TRADE PRO 2.0 absorption zones and entry points. Use this sequence when a Rejection Day develops.
1. Rejection Day: Establish a new position after rejection. Entries can be made on the day of a confirmed rejection
day, or in the coming days at the Primary Absorption Zone (2).

2. Primary Absorption Zone: The zone between the Rejection Day midpoint and the rejected price level becomes the
absorption zone, which bulls will use to establish positions. A daily close below this zone will ruin this trade and
trigger a stop run to the downside, thus positions must be exited at such time.

3. Absorption Day: Add to your position (or establish a new position) at the Absorption Zone on these days.

4. Failed New Low: Add to your position (or establish a new position) should a Failed New Low develop.
5. Stop Run Day: Add to your position at the breakout point or lower on this day, and take partial profits at the close.

6. Secondary Absorption Zone: The zone between the Stop Run Day midpoint and recent resistance. Defend trades,
or establish new positions, at this zone. A daily close below this zone will ruin this trade and trigger a stop run to
the downside, thus positions must be exited at such time.

7. Retest After Stop Run: Add to positions (or establish a new position) upon a retest of prior resistance from above.

8. Continuation Day: Ideally, the continuation day fuels a move to your primary target, allowing you to take partial 5 SECONDARY
profits and reduce risk exposure. 6 ABSORPTION
8 ZONE
7
Entry 5
Add to position, or establish
PRIMARY new position, upon a retest
Entry 4
ABSORPTION 2 Add to position on this day, and take
ZONE partial profits ahead of the close
3 3
4
Entry 1 Entry 2
Establish full/partial Add to position, or establish new position, Entry 3
position on this day at the absorption zone (price must open Add to position, or establish new
* This sequence can be used for any major rejection day, above the Rejection Day midpoint for an position, should a failed new low develop
including Failed New Low and Outside Day day types

**Flip for bearish sequence 1 entry trigger to be considered)

 TRADE SEQUENCES
REJECTION DAY TRADE SEQUENCE
The Rejection Day is the first day of the Rejection
Day trade sequence. The primary objective during
this day is to confirm the rejection day by the end 1st Entry Opportunity: If the
of the day, with the option to enter a position (full rejection day is confirmed by
the end of the day, execute an
or partial) at some point during the day, usually in
entry during the last hour of the
the last hour of the session. day, either partial or full

CLVN
1

Rejection Day: Significant rejection day

develops above the 27.70 CLVN, with
quarterly earnings in 3 days. Expecting
a pop into earnings, with a shot at
reaching our forecasted high probability
target zone between 32 and 33.
6 1. Rejection Day

2 5 2. Absorption Zone
3 3. Absorption Day
Rejection Day 4. Failed New Low
Sequence 5. Stop Run Day
1 6. Continuation Day
 TRADE SEQUENCES
REJECTION DAY TRADE SEQUENCE
The Absorption Day develops after rejection, Absorption Day: Bulls will look
and can last between 1 and 4 days in many to defend the absorption zone
cases. The primary objective during this day on day 2 after rejection, which
offers ideal trade location for
is to execute an entry (full, partial, or add-on) swing longs. A daily close
at the absorption zone, which is at/near the below the absorption zone
rejection day midpoint. breaks this trade opportunity.

2 2nd Entry Opportunity:

3 Execute an entry at the
absorption zone on Day 2
at/near the rejection day
1 midpoint, either partial or full CLVN

1. Rejection Day

2. Absorption Zone
3. Absorption Day
4. Failed New Low
5. Stop Run Day
6. Continuation Day
 Failed New Low: Price drops
TRADE SEQUENCES through two-day lows and retests
the primary absorption zone of
REJECTION DAY TRADE SEQUENCE the rejection day, which is again
The Failed New Low day type is a powerful defended by bulls. Waiting for
rejection day in and of itself, and within the confirmation on this day (an ability
to reestablish acceptance back
Rejection Day trade sequence, the FNL
above yLO) offers an opportunity
offers an opportunity to add to a position to execute, or add to, a position.
or execute a new one, and tends to
develop 2 or 3 days after rejection.

2 3rd Entry Opportunity:

34 Execute an entry after
confirmation of the FNL,
either partial or full. After
four days of development, CLVN
1 this will likely be the last
opportunity to trigger an
entry ahead of the next
move.

6 1. Rejection Day

2 5 2. Absorption Zone
3 3. Absorption Day
Rejection Day 4. Failed New Low
Sequence 5. Stop Run Day
1 6. Continuation Day
 TRADE SEQUENCES
REJECTION DAY TRADE SEQUENCE
After building a position during the first few days Profit-Taking Opportunity:
of a rejection day trade sequence, your primary Price pops higher on earnings
goal is to take profits on the first favorable pop and reaches our forecasted
into your forecasted target zone, while looking to target zone between 32 and 33.
dump the trade if price fails to hold above the This is the ideal opportunity to
take full or partial profits after
absorption zone on a daily closing basis.
building a position during the
5/6 first four days of the rejection
day trade sequence.

2
3 4
1. Rejection Day

2. Absorption Zone
1
Rejection Day Sequence
3. Absorption Day
4. Failed New Low
5. Stop Run Day
6. Continuation Day
 THE STOP RUN SEQUENCE
This blueprint illustrates the Stop Run trade sequence, wherein the entries can serve as both
SWING TRADE PRO 2.0 day and swing trading opportunities. Use this sequence when a Stop Run Day develops.
1. Stop Run Day: A failed new low offers the earliest opportunity to
establish a new position, while a secondary entry occurs upon A rejection of the Stop Run Day high
expansion through the breakout point (previous highs).
price offers the opportunity to hedge
2. Primary Absorption Zone: The zone between the Stop Run Day your current bullish position, with
midpoint and the rejected price level becomes the absorption zone. targets at the stop run day midpoint
Defend current position, or establish new positions, here. A daily
Entry 3
close below this zone will ruin this trade sequence, thus positions
must be exited at such time.

3. Fade After Stop Run: Rejection at the Stop Run Day high will
3
SECONDARY
trigger a short term countertrend fade opportunity back to the Stop
Run Day midpoint. This move can be used as a standalone day ABSORPTION ZONE
trade or as a hedge, with targets at the Stop Run Day midpoint.

4. Absorption Days: Add to your position (or establish a new

position) on these days, including days with Failed New Lows.

5. Continuation Day: Ideally, the continuation day fuels a move to 5

your primary target, allowing you to take partial profits and reduce
risk exposure.
2 PRIMARY ABSORPTION ZONE
4 4
Entry 4
Entry 2 Add to position, or establish new position, upon a retest
Add to position upon a break through yHI, including defending
retests of yHI from above, and take partial profits ahead of the close
yLO

Entry 1
*Flip for bearish sequence 1 Establish full/partial position upon a rejection of yLO, including retests from above
 TRADE SEQUENCES
STOP RUN TRADE SEQUENCE
Stop Run Days usually produce the biggest
moves the market has to offer. As such, being
able to diagnose a potential stop run day
before it happens becomes extremely
beneficial in being able to position yourself
ahead of the next big move. These days can
be played as day trades, or as swing trades.

1st Entry Opportunity: Typically, a stop run day

will experience an aggressive trend day structure.
1. Stop Run Day
Look to execute a full position upon a retest of
2. Absorption Zone yHI from above, with the option of taking profits
3. Fade After Stop Run in the last hour of the day (partial or full).
4. Absorption Day
5. Continuation Day Absorption Zone: Bulls will look to defend the
2 absorption zone on Day 2 after stop run, which
offers ideal trade location for swing longs. Bulls will
Stop Run Day: Stop Run Day initially begins to develop upon want to add to positions, or establish new positions,
a failure to establish acceptance below the previous session’s at this zone in the coming days. A daily close below CLVN
low price, which triggers a stop run through the previous the absorption zone breaks this trade opportunity.
session’s high price. This rejection also coincides with a
significant CLVN at 30, which is market structure support. 1
 TRADE SEQUENCES
STOP RUN TRADE SEQUENCE
The day after a Stop Run Day can offer two-
way trade, including a fade opportunity back to
the previous session’s midpoint. Bulls will be
looking to defend a pullback to the absorption
zone, which offers traders the ability to initiate,
or add to, a position on a swing basis.

Fade After Stop Run: Look to the Stop Run • Option 1: Execute a stand-alone short position should
Day high for signs of rejection the next morning, rejection occur at yHI, with a target as low as yMid

as a fade opportunity may present itself back to • Option 2: Execute a short position that acts as a short
the stop run day midpoint/breakout point. term hedge to protect a long position, thus
counteracting the pullback

• Option 3: Scale a portion of long position in the last

hour of the stop run day, and then add back to the
3 position at the absorption zone upon a retest on Day 2

1. Stop Run Day

2. Absorption Zone 2nd Entry Opportunity: Execute an entry at the

3. Fade After Stop Run absorption zone on Day 2 at/near the rejection
4. Absorption Day day midpoint/breakout point. This entry can serve
5. Continuation Day as a full or partial entry.
4 2
Absorption Zone: Bulls will look to defend the CLVN
absorption zone for several days, unless a daily
close below the zone occurs.
1
 TRADE SEQUENCES
STOP RUN TRADE SEQUENCE
In most cases, bulls will need to keep the
Stop Run Day midpoint bid in order to
maintain control of the developing move
higher. Pullbacks to the absorption zone
over the next 2 to 3 days offer opportunities
for bulls to initiate or defend a position.

3
1. Stop Run Day

2. Absorption Zone 3rd Entry Opportunity: Day 3 after stop run usually
3. Fade After Stop Run involves looking for a failed new low, which could
4. Absorption Day provide another entry opportunity. Execute an entry
5. Continuation Day upon a rejection of yLO at the absorption zone. This
4 2 entry can serve as a full or partial entry.

Absorption Zone: After a couple of days of 4

absorption, bulls need price to remain above CLVN
the absorption zone. A daily close below this
zone will likely trigger a long liquidation.
1
 TRADE SEQUENCES
STOP RUN TRADE SEQUENCE
After building a position during the
first few days of a stop run day trade
sequence, your primary goal is to take
profits on the first favorable pop into
your forecasted target zone, while
looking to dump the trade if price fails
to hold above the absorption zone on
a daily closing basis.
Profit-Taking Opportunity: Price pops
higher after earnings, allowing for an ideal
opportunity to take full or partial profits
5 after building a position during the first few
days of the stop run day trade sequence.

3
1. Stop Run Day
Failed New Lows: Several entry/re-entry
2. Absorption Zone opportunities develop throughout the life
3. Fade After Stop Run cycle of this stop run trade sequence, with
4. Absorption Day each revealing itself as a Failed New Low.
5. Continuation Day
4 4 2
4
CLVN

1Stop Run Sequence

 FAILED ABSORPTION SEQUENCE
This blueprint illustrates the Failed Absorption trade sequence, including identifying the primary
absorption zone and all entry points. Use this sequence when Failed Absorption is suspected to occur.
SWING TRADE PRO 2.0
4 FAILED BREAKOUT

Entry 1
Establish full/partial
position on this day

PRIMARY 6 RETEST AFTER

ABSORPTION
ZONE
2 STOP RUN
3 3 3 Entry 3
5 Add to position, or establish
new position, upon a retest
Entry 2
Add to position on this day, and take 7
partial profits ahead of the close
1
1. Rejection Day: Bulls will build long positions at the Primary Absorption Zone after a Rejection Day develops. A failure of these longs
to get paid will trigger sell stops through the absorption zone, likely triggering a Stop Run Day and additional selling pressure.

2. Primary Absorption Zone: The zone between the Rejection Day midpoint and the rejected price level becomes the absorption zone.
This is the zone that will be used by the bulls to build/defend positions, while bears will look to trigger sell stops below it.

3. Absorption Days: Bulls will build/defend positions on these days, but after 3-5 days of failing effort, a Stop Run Day may be imminent.

4. Failed Breakout: Bulls attempt expansion, but a failed breakout through recent highs/resistance likely triggers a Stop Run Day. Build
short positions at the rejected price level where the failed breakout occurred. This is the earliest potential entry point.

5. Stop Run Day: The failed breakout triggers sell stops, fueling an aggressive stop run day. Add to positions on this day.

6. Retest After Stop Run: Add to positions (or establish a new position) upon a retest of the failed absorption zone from below. A daily
close back above the primary absorption zone ruins this trade sequence, and positions must be exited at such time.

7. Continuation Day: Ideally, the continuation day fuels a move to the primary target, allowing you to take partial profits and reduce risk. *Flip for bullish sequence
 TRADE SEQUENCES
1. Rejection Day
FAILED ABSORPTION SEQUENCE
2. Absorption Zone
3. Absorption Days A Failed Absorption Sequence occurs after
4. Failed Breakout bulls fail to keep the absorption zone of a
5. Stop Run Day rejection day bid, thus triggering a long
6. Retest After Stop Run liquidation as bulls are forced to exit
7. Continuation Day
positions once sell stops are triggered. A
daily close below the midpoint of a rejection
day after several days of absorption will
usually lead to a failed absorption
sequence.

Absorption Zone: The

absorption zone develops CLVN
2 between the rejection day
midpoint and the price that
has been rejected. A daily
close below this zone will likely
trigger a long liquidation.
1
Rejection Day: Significant rejection day
develops at a CLVN between 175 and 176.
Bulls need to keep the absorption zone bid
for a shot at returning price to previous highs.
 TRADE SEQUENCES
1. Rejection Day
FAILED ABSORPTION SEQUENCE
2. Absorption Zone
3. Absorption Days The best Failed Absorption Sequences tend
4. Failed Breakout to start with several days of absorption,
5. Stop Run Day
6. Retest After Stop Run
which becomes the fuel for the next move.
7. Continuation Day Anywhere between 2 and 5 days of
absorption can usually build enough energy
for a significant long liquidation should price
close below the absorption zone.

Failed Breakout: Once price

closes below the rejection day
midpoint, bears will be looking
to trap bulls at/above yHI,
which tends to develops as a
failed breakout the next day if
2 bears are successful
3
Absorption Days: Bulls defend
price at the absorption zone for
1 two sessions, but price closes
below the rejection day midpoint
on Day 2 of absorption, which
opens the door to selling
pressure ahead.
 TRADE SEQUENCES
1. Rejection Day
FAILED ABSORPTION SEQUENCE
2. Absorption Zone
Failed Absorption is usually triggered by failure — price fails
3. Absorption Days
4. Failed Breakout to go higher and market participants fail to get paid, which
5. Stop Run Day then causes a long liquidation and selling pressure. As such,
6. Retest After Stop Run begin watching for failed breakouts and failed new highs
7. Continuation Day when a bullish rejection sequence can’t seem to find liftoff.
Failed Breakout: Price attempts to rally above yHI, but
fails. This failed breakout attempt, especially within a
downtrend, usually precedes a stop run, as bulls will be
forced to liquidate trades as the market sells off.
1st Entry Opportunity:
After price fails to close
above the absorption zone
4 in the previous session,
look to execute an entry
Long Liquidation: The bulls that defended the 2 (full or partial) upon a
market during the rejection day, and during the 3 rejection/retest of yHI the
next morning
subsequent two absorption days, fail to get paid,
which triggers the beginning of a long liquidation

1 5 Stop Run Day: After the failed

breakout, price pushes through
2nd Entry Opportunity: Typically, a stop
the absorption zone, triggering
run day will experience an aggressive an aggressive stop run day
trend day structure. Look to execute a
full position upon a retest of yLO from
below, with the option of taking profits in
the last hour of the day (partial or full).
 TRADE SEQUENCES
1. Rejection Day
FAILED ABSORPTION SEQUENCE
2. Absorption Zone
3. Absorption Days After building a position during the
4. Failed Breakout first few days of a rejection day trade
5. Stop Run Day
Failed New High/ sequence, your primary goal is to take
6. Retest After Stop Run
7. Continuation Day
Stop Run Day/ profits on the first favorable pop into
Outside Day/ your forecasted target zone, while
Rejection Day looking to dump the trade if price fails
to hold above the absorption zone on
a daily closing basis.

4 3rd Entry Opportunity: The

morning after stop run offers an
New Absorption Zone: The absorption zone is
opportunity to initiate or add to a
adjusted lower to coincide with the midpoint of 2 position. Execute an entry at/near
the stop run day and the 2-day absorption lows
6 the stop run day midpoint upon a
retest from below the next morning
1 5 7 Taking Profits: After price
drops and hits your forecasted
target zone, look to take
Retest After Stop Run: After
profits, ether partial or full,
significant selling pressure through
depending on your plan.
the absorption zone, bears will be
looking to defend a retests/pullbacks
into the absorption zone from below
 ACCUMULATION SEQUENCE
This blueprint illustrates the Accumulation trade sequence, including identifying tendencies of
accumulation and detailing each entry point. Use this sequence when Accumulation develops.
SWING TRADE PRO 2.0
1. Accumulation: Accumulation occurs when institutional investors buy substantial supply of a given stock, while simultaneously keeping price within a
narrow range for 20+ days, which eventually fuels expansion and a markup phase. Rounded bottoms are extremely reliable patterns of accumulation.

2. Breakout/Absorption Zone: The zone between the Stop Run Day midpoint and recent resistance, which bulls will use to defend their trades or establish
new positions. A daily close below this zone will ruin this trade and trigger a stop run to the downside, thus positions must be exited at such time.

3. Rejection Day: It can be challenging to discern when expansion will occur from the accumulation phase, but Rejection Days on the right side of a rounded
bottom can oftentimes precede expansion. Establish a partial position on this day, or the next session at the rejection day midpoint (3).

4. Absorption Day: Add to your position (or establish a new position) at the Absorption Zone on these days.

5. Stop Run Day: Add to your position on this day, or look to defend your position upon a retest of the breakout point from above in the days moving forward.

6. Retest After Stop Run: Defend your position upon a retest of the breakout point from above, or establish new position here. Multiple rotations can be
defended at this level. A daily close below this zone will ruin this trade and trigger a stop run to the downside, thus positions must be exited at such time.

7. Continuation Day: Ideally, the continuation day fuels a move to your pre-determined high probability target, allowing you to take partial profits and reduce
risk, but the position can be held to realize long term targets 6-12 months out, or can be used as a “buy-the-dips" candidate throughout the markup phase.
7
2
6

5 Entry 4
Add to position,
4 or establish new
position, upon a
Entry 3 retest

3 Add to position on this day,

or wait for Retest Entry (6)
Entry 1 Entry 2
Establish full/partial Add to position, or establish new
*Flip for bearish sequence
1 position on this day position, at the absorption zone
 TRADE SEQUENCES
ACCUMULATION SEQUENCE
The Accumulation Sequence is the most powerful of all patterns, as this
pattern develops over many weeks, months, or even years before releasing
significant energy once expansion occurs. Rounding and rejection on the right
side of the accumulation phase can be “tells” that price is nearing expansion.
2nd Entry Opportunity: The 3rd Entry Opportunity:

breakout the next session offers an A Failed New Low rejection

opportunity to add to the position, develops upon a retest of the
or initiate a new position absorption zone from above,
1st Entry Opportunity: If the Rejection which offers another entry
Day is confirmed by the end of the day, opportunity. Execute an entry
look to execute an entry during the last once FNL is confirmed,
hour of the day, either partial or full. either partial or full position.

2
56

1. Accumulation Rounded Bottom:

2. Breakout/Absorption Zone Accumulation: The accumulation Significant rounding of 3
3. Rejection Day phase lasts 8 weeks, which builds the accumulation phase, Rejection Day: Significant
4. Absorption Day plenty of energy to fuel a big move. which implies expansion Rejection Day develops after
5. Stop Run Day The range further compresses in may be near a multi-week failed new low,
6. Retest After Stop Run which suggests expansion
7. Continuation Day
the last 3 weeks, which suggests
expansion may be forthcoming.
1 may be imminent
 TRADE SEQUENCES
ACCUMULATION SEQUENCE
A true Accumulation phase will fuel a significant Markup
phase that can last as long as the time it takes to build the
accumulation itself, or longer. You must have the patience to
MARKUP
allow this time-based position to mature during the Markup PHASE
phase, as long as market structure remains intact.
Taking Profits:

Look to trim portions of

Managing the Trade: After building a position during the the position along the
accumulation sequence, look to hold the position for a longer term way, and take off the rest
move, anywhere from 6-8 weeks to year, depending on the phase of the position once price
of accumulation. This is a time-based trade that requires patience. either hits its price target,
Look to hold as long as price maintains its market structure. hits its time target, or
becomes range bound.

Time-Based Target: The phase of accumulation lasted Add-Backs & Swing Trades:

about 8 weeks, which means you can forecast about Once price has firmly transitioned into
6-8 weeks of expansion during the markup phase. a Markup phase from an Accumulation
phase, all pullbacks to the PEMA
2 7 trigger zone become buyable dips,
either to add to an existing position, or
1. Accumulation 4 to trade as standalone swing trades.
2. Breakout/Absorption Zone
3. Rejection Day Transition Phase:

ACCUMULATION Ideally, the transition from accumulation phase to

4. Absorption Day
5. Stop Run Day PHASE
3 markup phase should be quick and aggressive.
Accumulation
6. Retest After Stop Run
7. Continuation Day
1 Breakout Sequence
 PRESENTS

SWING TRADE PRO 2.0

THE 5-STEP SWING TRADING BLUEPRINT
STEP 2: TRADE SEQUENCES
 PRESENTS

SWING TRADE PRO 2.0

THE 5-STEP SWING TRADING BLUEPRINT
STEP 3: STRATEGY TOOLKIT
 STRATEGY TOOLKIT
BENEFITS OF TRADING OPTIONS
SWING TRADE PRO 2.0
In Step 3: Strategy Toolkit, you will learn about the options strategies that we will use in
3. STRATEGY our strategy toolkit. You will also learn how to choose the right strategy for the
opportunity presenting itself. But first, let’s discuss the benefits of trading options.

TOOLKIT Benefits of Trading Options:

CHOOSE A TRADING STRATEGY
• Less Capital Required: You can trade options using a fraction of the capital required
3.1 Credit Spreads to trade stocks or ETFs, which gives you additional capital to deploy.

3.2 Debit Spreads
• Less Risk: The risk is built into the options strategy that you choose, which allows
3.3 Neutral Strategies you to define your maximum allowable risk, even if the market were to suffer a
3.4 ITM Options catastrophic event, like a flash crash.

3.5 OTM Options • Higher Potential Return: While less capital is required to trade options, they can
3.6 Trade the Underlying return nearly 85% of the potential reward versus owning the stock, which means the
potential return on investment is oftentimes much higher trader options.

• More Strategies: Options provide a plethora of ways to strategically engage the

market, which is a stark contrast to the long-only or short-only approach to stocks.
 STRATEGY TOOLKIT:
CHOOSE A TRADING STRATEGY
SWING TRADE PRO 2.0 The Strategy Toolkit is designed to allow you 3.1 CREDIT SPREADS
to choose trading strategies that are — Put Credit Spread (BULLISH)

3. STRATEGY categorized by their relative risk profiles, thus

allowing you to pick the type of risk that
— Call Credit Spread (BEARISH)

3.2 DEBIT SPREADS

TOOLKIT
you’re willing to take relative to the probability
of profit for the opportunity that you’re — Call Debit Spread (BULLISH)

considering trading.
— Put Debit Spread (BEARISH)

CHOOSE A TRADING STRATEGY 3.3 NEUTRAL STRATEGIES

For example, Credit Spreads are at the low
3.1 Credit Spreads — Long Straddle (BREAKOUT)

end of the risk spectrum, while Neutral

Strategies are at the center and Trade the — Short Iron Butterfly (RANGE)
3.2 Debit Spreads
Underlying is at the high end of the risk 3.4 ITM OPTIONS
3.3 Neutral Strategies spectrum.
— ITM Long Call (BULLISH)

3.4 ITM Options — ITM Long Put (BEARISH)

Look to choose a relatively low-risk strategy,
3.5 OTM Options like a Credit or Debit Spread, for an 3.5 OTM OPTIONS
3.6 Trade the Underlying opportunity with good odds of profitability. — OTM Long Call (BULLISH)

Choose a more aggressive strategy, like ITM

— OTM Long Put (BEARISH)
Long Calls or Puts when the opportunity has
high odds of success. Your ability to 3.6 TRADE THE UNDERLYING
determine which trading strategy is right for — Covered Call (INCOME)

the setup that you are trading will go a long — Protective Put (HEDGE)

way toward building consistency.

— Collar (HEDGE)
 CREDIT SPREADS
Credit Spreads offer a low-risk approach to executing a bias in the market by betting where the
SWING TRADE PRO 2.0 market won’t go. Credit Spreads are an option strategy that pay out a net credit, as you are
selling a higher priced option and buying a lower priced option for protection. This approach

3. STRATEGY allows you to collect premium on the option sold, while limiting your risk with the cheaper
bought option.

TOOLKIT Credit Spread: Involves selling a higher priced option to collect premium, while buying a lower
priced option in the same underlying with the same expiration for risk protection, resulting in a
net credit for the trade.

CHOOSE A TRADING STRATEGY

3.1 Credit Spreads 3.1 CREDIT SPREADS
— Put Credit Spread (BULLISH)

• Put Credit Spread (Bullish)

— Call Credit Spread (BEARISH)
• Call Credit Spread (Bearish)
3.2 Debit Spreads Benefits of Credit Spreads:

3.3 Neutral Strategies • Defined Risk: This strategy allows you to cap your risk for a trade. No matter how the trade
3.4 ITM Options turns out, you cannot lose more than your pre-defined risk.


3.5 OTM Options • Max Profit is Easily Achieved: As long as price remains beyond the option sold, you will
3.6 Trade the Underlying achieve max profit for a trade. In essence, price can go strongly in your favor, mildly in your
favor, or remain flat, and you can still collect max profit with this strategy.


• Time Decay Works in Your Favor: When selling options, time decay is extremely helpful.
 CREDIT SPREADS:
PUT CREDIT SPREAD (BULLISH)
SWING TRADE PRO 2.0 OBJECTIVE: The objective of a Put Credit Spread is to execute a bullish income strategy for a net
credit while also reducing your maximum risk. The sold puts produce the income element, while the

3. STRATEGY bought puts limit your downside risk.

Direction: Bullish/Neutral

TOOLKIT Asset Legs: Short Put (higher strike), Long Put (lower strike)

When to Use: If you think the market will go up or sideways

Profit Characteristics: Retain the net credit if both options expire worthless — This is the ideal
CHOOSE A TRADING STRATEGY scenario for this trade.

3.1 Credit Spreads Loss Characteristics: Difference in strikes less the net credit you received

Decay Characteristics: Time decay is helpful when the position is winning, and harmful when the
• Put Credit Spread (Bullish) position is losing

• Call Credit Spread (Bearish) Max Risk: Capped

Max Reward: Capped

3.2 Debit Spreads

Strategy: 

3.3 Neutral Strategies • Use this strategy when you believe price will move higher or stay flat.

3.4 ITM Options • You’re selling premium, so you want time decay to work in your favor, therefore trade options with
15 days or less to expiration.

3.5 OTM Options • You want both options to expire worthless. If this happens, you won’t have to pay commission to
3.6 Trade the Underlying close the position.

• If the trade hits near max profit early in the trade, go ahead and take the windfall profits

• If the stock rises, both puts expire worthless, and you simply retain the entire net credit.

• If the stock falls, then your breakeven is the higher strike minus the net credit you received.
 CREDIT SPREADS:
PUT CREDIT SPREAD (BULLISH)
SWING TRADE PRO 2.0 EXECUTION: Sell the Put Credit Spread when the underlying reaches your entry trigger.

3. STRATEGY PUT CREDIT SPREAD EXAMPLE:

TOOLKIT
XYZ is trading at 100 in Jan and you believe that price will close above 100 at expiration:

Sell the Feb 100 put for 2.00

CHOOSE A TRADING STRATEGY Buy the Feb 95 put for .50

3.1 Credit Spreads

Risk Profile: 

• Put Credit Spread (Bullish) • Net Credit Transaction: Premium sold - premium bought (2.00 - .50 = 1.50)

• Call Credit Spread (Bearish) • Maximum Risk: Difference in strikes minus net credit ((100 - 95) - 1.50 = 3.50)

• Maximum Reward: Net credit received (1.50)

3.2 Debit Spreads • Breakeven: Higher strike minus net credit (100 - 1.50 = 98.50)

3.3 Neutral Strategies

• Collect 1.50 in Premium, which stays in your account if price closes above 100 at
3.4 ITM Options expiration

3.5 OTM Options • If price remains above 100, allow the options to expire worthless to keep the entire
credit and to avoid paying commissions

3.6 Trade the Underlying

• If price goes against the trade, the breakeven point is the higher strike minus the net
credit received

• Look to cover this trade ahead of expiration to avoid assignment if position is losing
 CREDIT SPREADS:
CALL CREDIT SPREAD (BEARISH)
SWING TRADE PRO 2.0 OBJECTIVE: The objective of a Call Credit Spread is to execute a bearish income strategy for a net
credit while also reducing your maximum risk. The sold calls produce the income element, while the

3. STRATEGY bought calls limit your upside risk.

Direction: Bearish/Neutral

TOOLKIT Asset Legs: Short Call (lower strike), Long Call (higher strike)

When to Use: If you think the market will go down or sideways

Profit Characteristics: Retain the net credit if both options expire worthless — This is the ideal
CHOOSE A TRADING STRATEGY scenario for this trade.

3.1 Credit Spreads Loss Characteristics: Difference in strikes less the net credit

Decay Characteristics: Time decay is helpful when the position is winning, and harmful when the
• Put Credit Spread (Bullish) position is losing

• Call Credit Spread (Bearish) Max Risk: Capped

Max Reward: Capped

3.2 Debit Spreads

Strategy: 

3.3 Neutral Strategies • Use this strategy when you believe price will move lower or stay flat.

3.4 ITM Options • You’re selling premium, so you want time decay to work in your favor, therefore trade options with
15 days or less to expiration.

3.5 OTM Options • You want both options to expire worthless. If this happens, you won’t have to pay commission to
3.6 Trade the Underlying close the trade.

• If the trade hits near max profit early in the trade, go ahead and take the windfall profits

• If the stock falls, both calls expire worthless, and you simply retain the entire net credit.

• If the stock rises, then your breakeven is the lower strike plus the net credit you received.
 CREDIT SPREADS:
CALL CREDIT SPREAD (BEARISH)
SWING TRADE PRO 2.0 EXECUTION: Sell the Call Credit Spread when the underlying reaches your entry trigger.

3. STRATEGY CALL CREDIT SPREAD EXAMPLE:

TOOLKIT
XYZ is trading at 100 in Jan and you believe that price will close below 100 at expiration:

Sell the Feb 100 call for 2.00

CHOOSE A TRADING STRATEGY Buy the Feb 105 call for .50

3.1 Credit Spreads

Risk Profile: 

• Put Credit Spread (Bullish) • Net Credit Transaction: Premium sold - premium bought (2.00 - .50 = 1.50)

• Call Credit Spread (Bearish) • Maximum Risk: Difference in strikes minus net credit ((105 - 100) - 1.50 = 3.50)

• Maximum Reward: Net credit received (1.50)

3.2 Debit Spreads • Breakeven: Lower strike plus net credit (100 + 1.50 = 101.50)

3.3 Neutral Strategies

• Collect 1.50 in Premium, which stays in your account if price closes below 100 at
3.4 ITM Options expiration

3.5 OTM Options • If price remains below 100, allow the options to expire worthless to keep the entire
credit and to avoid paying commissions

3.6 Trade the Underlying

• If price goes against the trade, the breakeven point is the lower strike plus the net credit
received

• Look to cover this trade ahead of expiration to avoid assignment if position is losing
 DEBIT SPREADS
Debit Spreads offer a risk-defined approach to executing a directional bias in the market.
SWING TRADE PRO 2.0 Debit Spreads are an option strategy that results in a net debit, as you are buying a higher
priced option and selling a lower priced option in order to offset time decay, limit risk, and

3. STRATEGY reduce the cost basis of the trade.

Debit Spreads: Involves buying a higher priced option, while selling a lower priced option
TOOLKIT in the same underlying with the same expiration in order to offset the effects of time decay
and reduce cost, resulting in a net debit for the trade.

CHOOSE A TRADING STRATEGY

3.2 DEBIT SPREADS
3.1 Credit Spreads — Call Debit Spread (BULLISH)

3.2 Debit Spreads — Put Debit Spread (BEARISH)

• Call Debit Spread (Bullish)
Benefits of Debit Spreads:
• Put Debit Spread (Bearish)
3.3 Neutral Strategies • Defined Risk: This strategy allows you to cap your risk for a trade. No matter how the
trade turns out, you cannot lose more than the amount you paid for the trade.

3.4 ITM Options

3.5 OTM Options • Time Decay is Offset: Buy selling the lower priced option, you are essentially offsetting
3.6 Trade the Underlying the negative effects of time decay.


• Lower Cost Basis: By selling the lower priced option, you are reducing the cost basis
of the trade, while also improving your breakeven point.
 DEBIT SPREADS:
CALL DEBIT SPREAD (BULLISH)
SWING TRADE PRO 2.0 OBJECTIVE: The objective of a Call Debit Spread is to execute a bullish trade by buying

3. STRATEGY
calls, while reducing your maximum risk by selling calls at a higher strike. The sold calls cap
profit potential, but also reduce your cost basis, risk, and breakeven points.

TOOLKIT Direction: Bullish

Asset Legs: Long Call (lower strike), Short Call (higher strike)

CHOOSE A TRADING STRATEGY When to Use: If you think the market will go up, but with limited upside potential

Profit Characteristics: Max profit is reached if price closes at or above the sold call at
3.1 Credit Spreads expiration — This is the ideal scenario for this trade.

3.2 Debit Spreads Loss Characteristics: Max risk is the net cost of the spread

Decay Characteristics: Time decay is helpful when the position is winning, and harmful
• Call Debit Spread (Bullish) when the position is losing

• Put Debit Spread (Bearish) Max Risk: Capped

Max Reward: Capped

3.3 Neutral Strategies

3.4 ITM Options Strategy: 

• Use this strategy when you believe price will move higher, but has limited upside potential.

3.5 OTM Options • If the stock rises to the higher (sold) call, you make max profit

3.6 Trade the Underlying • If the stock falls below the lower (bought) call, you take a max loss

• If the stock falls somewhere in between, then you must clear the breakeven point, which
is the lower strike plus the net debit.
 DEBIT SPREADS:
CALL DEBIT SPREAD (BULLISH)
SWING TRADE PRO 2.0 EXECUTION: Buy the Call Debit Spread when the underlying reaches your entry
trigger.

3. STRATEGY CALL DEBIT SPREAD EXAMPLE:

TOOLKIT XYZ is trading at 100 in Jan and you believe that price will rally, but has limited upside
CHOOSE A TRADING STRATEGY to about 105:

3.1 Credit Spreads Buy the Feb 100 call for 2.00

3.2 Debit Spreads Sell the Feb 105 call for .50

• Call Debit Spread (Bullish) Risk Profile: 

• Put Debit Spread (Bearish) • Net Debit Transaction: Premium bought - premium sold (2.00 - .50 = 1.50)

• Maximum Risk: Debit paid (1.50)

3.3 Neutral Strategies • Maximum Reward: Difference in strikes minus debit paid ((105 - 100) - 1.50 = 3.50)

3.4 ITM Options • Breakeven: Lower strike plus net debit (100 + 1.50 = 101.50)

3.5 OTM Options

• Max profit occurs if price rises to the higher (sold) strike

3.6 Trade the Underlying • If price closes below the lower (bought) strike at expiration, you take a max loss

• If price closes somewhere between the two strikes, your breakeven is the lower strike
plus the net debit paid
 DEBIT SPREADS:
PUT DEBIT SPREAD (BEARISH)
SWING TRADE PRO 2.0 OBJECTIVE: The objective of a Put Debit Spread is to execute a bearish trade by buying puts,
while reducing your maximum risk by selling puts at a lower strike. The sold puts cap profit

3. STRATEGY potential, but also reduce your cost basis, risk, and breakeven points.

Direction: Bearish

TOOLKIT Asset Legs: Long Put (higher strike), Short Put (lower strike)

When to Use: If you think the market will go down, but with limited downside potential

Profit Characteristics: Max profit is reached if price closes at or below the sold put at expiration
CHOOSE A TRADING STRATEGY — This is the ideal scenario for this trade.

3.1 Credit Spreads Loss Characteristics: Max risk is the net cost of the spread

Decay Characteristics: Time decay is helpful when the position is winning, and harmful when the
3.2 Debit Spreads position is losing

• Call Debit Spread (Bullish) Max Risk: Capped

Max Reward: Capped

• Put Debit Spread (Bearish)

Strategy: 

3.3 Neutral Strategies • Use this strategy when you believe price will move lower, but has limited downside potential.

3.4 ITM Options • If the stock falls to the lower (sold) put, you make max profit. If this happens prior to expiration,
go ahead and take profits.

3.5 OTM Options • If the sold options loses its value, you can take profits on this leg, and hold the long option as a
3.6 Trade the Underlying free trade.

• If the stock rises above the higher (bought) put, you take a max loss

• If the stock falls somewhere in between, then you must clear the breakeven point, which is the
higher strike minus the net debit.
 DEBIT SPREADS:
PUT DEBIT SPREAD (BEARISH)
SWING TRADE PRO 2.0 EXECUTION: Buy the Put Debit Spread when the underlying reaches your entry trigger.

3. STRATEGY PUT DEBIT SPREAD EXAMPLE:

XYZ is trading at 100 in Jan and you believe that price will fall, but has limited downside to
TOOLKIT about 95:

CHOOSE A TRADING STRATEGY Buy the Feb 100 put for 2.00

Sell the Feb 95 put for .50

3.1 Credit Spreads

3.2 Debit Spreads Risk Profile: 
• Net Debit Transaction: Premium bought - premium sold (2.00 - .50 = 1.50)

• Call Debit Spread (Bullish) • Maximum Risk: Debit paid (1.50)

• Put Debit Spread (Bearish) • Maximum Reward: Difference in strikes minus debit paid ((100 - 95) - 1.50 = 3.50)

• Breakeven: Higher strike minus net debit (100 - 1.50 = 98.50)

3.3 Neutral Strategies

3.4 ITM Options • Max profit occurs if price falls to the lower (sold) strike. Will take profits if this happens prior to
expiration.

3.5 OTM Options • If price closes above the higher (bought) strike at expiration, you take a max loss. If this
3.6 Trade the Underlying happens prior to expiration, there is no harm in holding onto the position, as there is always a
chance it could finish with value given there’s still time remaining to expiration.

• If price closes somewhere between the two strikes, your breakeven is the higher strike minus
the net debit paid
 NEUTRAL STRATEGIES
SWING TRADE PRO 2.0 Neutral Options Strategies are those that allow traders to make money in markets that
will either remain range-bound, or have the potential to see significant expansion.

3. STRATEGY While there are many different strategies for trading a neutral market, we will primarily
focus on executing Long Straddles for markets that are poised for expansion and

TOOLKIT selling Iron Butterflies for collecting premium during range-bound markets.

3.3 NEUTRAL STRATEGIES

CHOOSE A TRADING STRATEGY
— Long Straddle (BREAKOUT)

3.1 Credit Spreads — Iron Butterfly (RANGE)

3.2 Debit Spreads
Benefits of Neutral Strategies:
3.3 Neutral Strategies
• Long Straddle (Breakout) • Make Money When You Don’t Know Direction: Long Straddles allow traders to
• Short Iron Butterfly (Range) make money even when you don’t know which direction the market will break.
However, you need enough of a breakout to cover the cost of executing this strategy.

3.4 ITM Options

3.5 OTM Options • Make Money When the Market is Range Bound: Short Iron Butterflies allow traders
to make money when a market has become range-bound. In essence, you are able to
3.6 Trade the Underlying take advantage of situations when the market isn’t moving by selling premium.
Commission costs can add up quickly with this four-leg trade, so use accordingly.
 NEUTRAL STRATEGIES
LONG STRADDLE (BREAKOUT)
SWING TRADE PRO 2.0 OBJECTIVE: The objective of a Long Straddle is to execute a neutral trade for a capital gain while
expecting a surge in volatility. Ideally you are looking for a scenario where Implied Volatility is currently

3. STRATEGY very low, giving you cheaper option prices, but the stock is about to make an explosive move — you
just don’t know which direction.

TOOLKIT Direction: Neutral (Breakout)

Asset Legs: Long Call, Long Put (same strike and expiration)

When to Use: When premiums are low and you think the market is ready for an explosive breakout in
CHOOSE A TRADING STRATEGY either direction

3.1 Credit Spreads Profit Characteristics: Profit is open-ended in both directions

Loss Characteristics: Limited to the cost of the spread; max loss occurs if the market closes at your
3.2 Debit Spreads strike at expiration

Decay Characteristics: Time decay really works against this position

3.3 Neutral Strategies

Max Risk: Capped

• Long Straddle (Breakout) Max Reward: Uncapped

• Short Iron Butterfly (Range) Strategy: 

3.4 ITM Options • Use this strategy when premiums are low and you believe price will see a breakout in either direction

• This is a high cost trade; needs a big enough move to cover costs

3.5 OTM Options • Consider this trade ahead of earnings or news

• Consider stocks with price ranges that are compressed and ready for range expansion

3.6 Trade the Underlying

• Buy puts/calls with 45+ days to expiration

• If the stock hasn’t moved, sell your position to avoid holding into the last month (to avoid serious
time decay)
 NEUTRAL STRATEGIES
LONG STRADDLE (BREAKOUT)
SWING TRADE PRO 2.0 EXECUTION: Buy the Long Straddle when the price of the underlying is at, or very close, to the
strike you wish to straddle, and when volatility is low (to pay cheaper premiums).

3. STRATEGY LONG STRADDLE EXAMPLE:

TOOLKIT XYZ is trading at 100 in Jan and you believe that price will experience a significant breakout
soon, but direction is unknown:

CHOOSE A TRADING STRATEGY

Buy the Apr 100 call for 2.55

3.1 Credit Spreads Buy the Apr 100 put for 2.25

3.2 Debit Spreads

Risk Profile: 
3.3 Neutral Strategies
• Long Straddle (Breakout) • Net Debit Transaction: Premiums bought (2.55 + 2.25 = 4.80)

• Maximum Risk: Debit paid (4.80)

• Short Iron Butterfly (Range) • Maximum Reward: Unlimited (∞)

3.4 ITM Options • Breakeven Up: Strike + net debit (100 + 4.80 = 104.80)

• Breakeven Down: Strike - net debit (100 - 4.80 = 95.20)

3.5 OTM Options

3.6 Trade the Underlying • This trade needs a big enough breakout to cover the net debit cost

• Execute this strategy when volatility is low to pay cheaper premiums

• If price doesn’t move, look to exit this trade 20-30 days before expiration, as time decay will
begin to work doubly against the trade
 NEUTRAL STRATEGIES
SHORT IRON BUTTERFLY (RANGE)
SWING TRADE PRO 2.0 OBJECTIVE: The objective of a Short Iron Butterfly is to execute a neutral trade for a capital gain while
expecting price to remain mostly range-bound. Ideally you are looking for a scenario where Implied
3. STRATEGY Volatility is currently very high, giving you high option premiums to sell, but price action is likely to
become range bound as volatility decreases. This strategy combines Put and Call Credit Spreads.

TOOLKIT Direction: Neutral (Range)

Asset Legs: Short ATM Call, Short ATM Put, Long OTM Call, Long OTM Put (same strike and expiration)

CHOOSE A TRADING STRATEGY When to Use: When premiums are high and you expect the market to become range-bound

Profit Characteristics: Profit is limited to the net credit received; Max profit occurs if the market closes
3.1 Credit Spreads precisely at the sold strike at expiration

Loss Characteristics: Limited to the difference in strikes minus the net credit received

3.2 Debit Spreads Decay Characteristics: Time decay significantly helps this trade

Max Risk: Capped

3.3 Neutral Strategies

Max Reward: Capped

• Long Straddle (Breakout)

Strategy: 

• Short Iron Butterfly (Range) • Use this strategy when premiums are high and you believe price will become range-bound and
3.4 ITM Options volatility will drop

• For a neutral bias, sell the ATM puts and calls. Add a directional bias to the position by selling puts/
3.5 OTM Options calls above or below current price.

• Do not trade this strategy ahead of earnings or news

3.6 Trade the Underlying • Consider stocks that have experienced major volatility and are due for compression

• Use this strategy with 30 days or less to expiration, but preferably less than 15 days to expiration

• Look to close out the position just before expo, as most of the profit will be realized closer to expo
 NEUTRAL STRATEGIES
SHORT IRON BUTTERFLY (RANGE)
SWING TRADE PRO 2.0 EXECUTION: Sell the Iron Butterfly when the price of the underlying is at, or very close, to the strike you
wish to straddle, and when implied volatility is high (in order to collect higher premiums).

3. STRATEGY SHORT IRON BUTTERFLY EXAMPLE:

TOOLKIT XYZ is trading at 100 in Jan and you believe volatility will decline and that price will remain around 100
by the next expiration.

CHOOSE A TRADING STRATEGY Buy the Feb 105 call for .40

Sell the Feb 100 call for 2.00

3.1 Credit Spreads Sell the Feb 100 put for 2.40

Buy the Feb 95 put for .60

3.2 Debit Spreads

3.3 Neutral Strategies Risk Profile: 

• Long Straddle (Breakout) • Net Credit Transaction: Premium sold - premium bought (4.40 - 1.00 = 3.40)

• Short Iron Butterfly (Range) • Maximum Risk: (Sold strike - bought strike) - net credit ((100 - 95) - 3.40 = 1.60)

• Maximum Reward: Net credit received (3.40)

3.4 ITM Options • Breakeven Up: Sold strike + net credit (100 + 3.40 = 103.40)

• Breakeven Down: Sold strike - net credit (100 - 3.40 = 96.60)

3.5 OTM Options

3.6 Trade the Underlying • This trade needs implied volatility to drop and for price to remain near the sold strike

• Execute this strategy when volatility is high to collect higher premiums

• Look to close out this trade ahead of expiration to avoid potential assignment

• This is a high cost trade; use accordingly

 NEUTRAL STRATEGIES
SHORT IRON BUTTERFLY (RANGE) Buy 40 Call
The objective of a Short Iron Butterfly is to execute a neutral trade for a capital Breakeven Up: 39.25
gain while expecting price to remain mostly range-bound. Ideally you are
looking for a scenario where Implied Volatility is currently very high, giving you
high option premiums to sell, but price action is likely to become range bound Sell 37 Call

as volatility decreases. This strategy combines Put and Call Credit Spreads. Sell 37 Put
TIPS:
— Sell the Iron Fly when implied volatility is high to collect higher premiums

— Sell the Iron Fly when price is likely to become range-bound

Breakeven Dn: 34.75
— Sell the Iron Fly when implied volatility is likely to decline

— Do not use this strategy ahead of earnings or anticipated news

Buy 34 Put
— Buy farther OTM calls/puts for a wider breakeven range
EXECUTION: Sell the Iron Butterfly when the
price of the underlying is at, or very close, to
the strike you wish to sell, and when volatility
is high (to collect higher premiums).

EXAMPLE:
— Sell 20 APR (22) 37 Call

— Sell 20 APR (22) 37 Put

— Buy 20 APR (22) 40 Call

IRON BUTTERFLY CREDITS: — Buy 20 APR (22) 40 Put

29 MAR — Net Credit: 2.25

6 APR (8) Weekly:

1.85
— Max Risk: 0.75 (37 - 34 - 2.25 = 0.75)

13 APR (15) Weekly:

2.10
— Max Reward: 2.25 (credit received)
20 APR (22) Monthly: 2.25
 NEUTRAL STRATEGIES
SHORT IRON BUTTERFLY (RANGE) Buy 40 Call
Use the Short Iron Butterfly strategy after price Breakeven Up: 39.25
experiences volatility and is likely due for
compression. This trade needs implied volatility to 20 APR
drop and for price to remain near the sold strike.
Sell 37 Call

TIPS: Sell 37 Put

— Look to close out the position just before
expo, as most of the profit will be realized
closer to expiration

— For a neutral bias, sell the ATM puts/calls 6 APR Breakeven Dn: 34.75
— For directional bias, sell puts/calls above Buy 34 Put
or below current price
13 APR

EXAMPLE:
Notice how the value of the Iron
— Value of 20 APR Iron Butterfly (at expo): 0.67

Butterfly fluctuates as price gets

— Value of 20 APR 40 Call: 0.00

closer and farther away from the

— Value of 20 APR 37 Call: 0.00

sold strikes, and how this impacts

— Value of 20 APR 37 Put: 0.67

options with closer expirations — Value 20 APR 34 Put: 0.00

versus expirations farther away

— Final Credit: 1.58 (2.25 - 0.67 = 1.58)

IRON BUTTERFLY CREDITS:

29 MAR 2 APR 6 APR 13 APR 20 APR
6 APR (8) Weekly:
1.85
1.75
.52
NT
NT

13 APR (15) Weekly:

2.10
2.07
1.72
2.27
NT

20 APR (22) Monthly: 2.25 2.30 2.00 2.15 .67

 ITM OPTIONS
ITM Options are options that are “in-the-money,” which means the stock price is above
SWING TRADE PRO 2.0 the strike price for calls, and below the strike price for puts, thus giving these options
intrinsic and time value. These options are more expensive, and the farther in-the-

3. STRATEGY money they are, the more expensive the options become.

ITM Options: In-the-money options means the stock price is above the strike price (for
TOOLKIT calls) or below the strike price (for puts), which gives these options intrinsic and time
value, thus making them more valuable and expensive.

CHOOSE A TRADING STRATEGY

3.4 ITM OPTIONS
3.1 Credit Spreads
— ITM Long Calls (BULLISH)

3.2 Debit Spreads — ITM Long Puts (BEARISH)

3.3 Neutral Strategies
Benefits of ITM Options:
3.4 ITM Options
• ITM Long Calls (Bullish) • Have More Value: ITM Options have more value, so you get what you pay for with
• ITM Long Puts (Bearish) these options. These options will retain more value if the position begins to go
against you due to intrinsic value.

3.5 OTM Options
3.6 Trade the Underlying • Slightly Less Risky: ITM Options are less risky compared to their OTM counterparts
due to having both intrinsic and time value, which means they will be more forgiving
should the position begin to go against your desired direction.
 ITM OPTIONS
ITM LONG CALLS (BULLISH)
SWING TRADE PRO 2.0 OBJECTIVE: The objective of using ITM Long Calls is to execute a bullish trade when you
are highly bullish and want to be aggressive. This approach improves overall return versus

3. STRATEGY buying the underlying outright, while inherently protecting your downside risk.

Direction: Bullish

TOOLKIT Asset Legs: Long Calls (Delta 70 or higher)

When to Use: When you are highly bullish

CHOOSE A TRADING STRATEGY Profit Characteristics: Profit increases as the market rises, with unlimited profit potential

Loss Characteristics: Max risk is the amount paid for the calls

3.1 Credit Spreads

Decay Characteristics: Time decay erodes the value of the options as expiration
3.2 Debit Spreads approaches

3.3 Neutral Strategies Max Risk: Capped

Max Reward: Unlimited

3.4 ITM Options

• ITM Long Calls (Bullish) Strategy: 

• Use this strategy when you are extremely bullish and believe price will move higher

• ITM Long Puts (Bearish)

• The cost of the option will be higher, which carries more risk, but being “in the money”
3.5 OTM Options gives the option more intrinsic value

3.6 Trade the Underlying • Give yourself enough time to be right before expiration (30-45 days)

• The trade is profitable at expiration if price closes above the breakeven point, which is
the strike plus the price paid for the option

• If the stock falls below the strike of the call, you take a max loss
 ITM OPTIONS
ITM LONG CALLS (BULLISH)
SWING TRADE PRO 2.0 EXECUTION: Buy the ITM Long Call options (70 Delta or better) when the price of the
underlying reaches your entry trigger.

3. STRATEGY ITM LONG CALL EXAMPLE:

TOOLKIT XYZ is trading at 100 in Jan and you believe that price will experience a high probability move to
the upside.

CHOOSE A TRADING STRATEGY

Buy the Feb 97.50 call for 3.55

3.1 Credit Spreads

3.2 Debit Spreads Risk Profile: 

3.3 Neutral Strategies • Net Debit Transaction: Premium bought (3.55)

3.4 ITM Options • Maximum Risk: Debit paid (3.55)

• Maximum Reward: Unlimited (∞)

• ITM Long Calls (Bullish) • Breakeven: Strike + net debit (97.50 + 3.55 = 101.05)

• ITM Long Puts (Bearish)

• This trade needs a big enough move to cover the net debit cost

3.5 OTM Options • Execute this strategy when you expect a high probability move higher

3.6 Trade the Underlying • It is not necessary to hold this trade to expiration, especially if your profit target(s) have been
reached

• Give yourself enough time in the trade (days to expiration) to be right, ideally 45+ days to
expiration
 ITM OPTIONS
ITM LONG PUTS (BEARISH)
SWING TRADE PRO 2.0 OBJECTIVE: The objective of using ITM Long Puts is to execute a bearish trade when you are
highly bearish and want to be aggressive. This approach improves overall return versus selling
3. STRATEGY the underlying outright, while inherently protecting your upside risk.

TOOLKIT
Direction: Bearish

Asset Legs: Long Puts (Delta 70 or higher)

When to Use: When you are highly bearish

CHOOSE A TRADING STRATEGY Profit Characteristics: Profit increases as the market falls, with unlimited profit potential

3.1 Credit Spreads Loss Characteristics: Max risk is the amount paid for the puts

Decay Characteristics: Time decay erodes the value of the options as expiration approaches

3.2 Debit Spreads Max Risk: Capped

3.3 Neutral Strategies Max Reward: Unlimited (to a stock price of zero)

3.4 ITM Options Strategy: 

• ITM Long Calls (Bullish) • Use this strategy when you are extremely bearish and believe price will move lower

• The cost of the option will be higher, which carries more risk, but being “in the money” gives
• ITM Long Puts (Bearish) the option more intrinsic value

3.5 OTM Options • Give yourself enough time to be right before expiration (30-45 days)

• The trade is profitable at expiration if price closes below the breakeven point, which is the
3.6 Trade the Underlying strike minus the price paid for the put

• If the stock rises above the strike of the put, you take a max loss — in this scenario just
allow the puts to expire worthless (pay no commission, and you don’t have to deliver stock)
 ITM OPTIONS
ITM LONG PUTS (BEARISH)
SWING TRADE PRO 2.0 EXECUTION: Buy the ITM Long Put options (70 Delta or better) when the price of the
underlying reaches your entry trigger.

3. STRATEGY ITM LONG PUT EXAMPLE:

TOOLKIT XYZ is trading at 100 in Jan and you believe that price will experience a high probability move to
the downside.

CHOOSE A TRADING STRATEGY

Buy the Feb 102.50 put for 3.55

3.1 Credit Spreads

3.2 Debit Spreads Risk Profile: 

3.3 Neutral Strategies • Net Debit Transaction: Premium bought (3.55)

3.4 ITM Options • Maximum Risk: Debit paid (3.55)

• Maximum Reward: Unlimited (to zero)

• ITM Long Calls (Bullish) • Breakeven: Strike - net debit (102.50 - 3.55 = 98.95)

• ITM Long Puts (Bearish)

• This trade needs a big enough move to cover the net debit cost

3.5 OTM Options • Execute this strategy when you expect a high probability move lower

3.6 Trade the Underlying • It is not necessary to hold this trade to expiration, especially if your profit target(s) have been
reached

• Give yourself enough time in the trade (days to expiration) to be right, ideally 45+ days to
expiration
 OTM OPTIONS
OTM Options are options that are “out-of-the-money,” which means the stock price is below the
strike price for calls, and above the strike price for puts, thus giving these options time value,
SWING TRADE PRO 2.0 but not intrinsic value. These options are cheap, and the farther out-of-the-money they are, the
cheaper the options become. These options are typically called “lottery tickets” because of

3. STRATEGY potentially explosive percentage gains, but are EXTREMELY risky, and should only be traded
sparingly.

TOOLKIT OTM Options: Out-of-the-money options means the stock price is below the strike price for
calls or above the strike price for puts, which leaves these options with time value, but not
CHOOSE A TRADING STRATEGY intrinsic value, thereby making them less valuable and less expensive.

3.1 Credit Spreads 3.5 ITM OPTIONS

— OTM Long Calls (BULLISH)

3.2 Debit Spreads

— OTM Long Puts (BEARISH)
3.3 Neutral Strategies
3.4 ITM Options Benefits of OTM Options:

3.5 OTM Options • They are Cheap: It is not uncommon to pay pennies for OTM options, and for good cause —
• OTM Long Calls (Bullish) the likelihood of price being ITM at expiration is quite low. So while they’re quite cheap, the
risk of losing the entire amount paid for the option is high, unless you are very right on
• OTM Long Puts (Bearish) direction and timing.

3.6 Trade the Underlying
• Percentage Gain Can Be Big: Because of the cheap nature of OTM options, major
percentage gains can be seen if price explodes in your desired direction. However, time decay
hits OTM options harder than their ITM counterparts, so exercise caution.
 OTM OPTIONS
OTM LONG CALLS (BULLISH)
SWING TRADE PRO 2.0 OBJECTIVE: The objective of using OTM Long Calls is to execute a bullish trade when you are either
extremely bullish or want a “lottery ticket” approach to a trade. This approach reduces the cost of the

3. STRATEGY trade, and also increases the potential return. However, this play is very risky because OTM options do
not have intrinsic value and have greater odds of expiring worthless, thus resulting in complete loss of
the trade.

TOOLKIT Direction: Bullish

Asset Legs: Long Calls

CHOOSE A TRADING STRATEGY When to Use: When you are extremely bullish, or want a “lottery ticket"

Profit Characteristics: Profit increases as the market rises, with unlimited profit potential

3.1 Credit Spreads Loss Characteristics: Max risk is the amount paid for the calls

3.2 Debit Spreads Decay Characteristics: Time decay erodes the value of OTM options at a much higher rate than ITM
options

3.3 Neutral Strategies Max Risk: Capped

Max Reward: Unlimited

3.4 ITM Options

3.5 OTM Options Strategy:

• Use this strategy when you are extremely bullish

• OTM Long Calls (Bullish) • Go slightly OTM to reduce your cost basis

• Go deep OTM when you want a “lottery ticket” approach to a trade

• OTM Long Puts (Bearish)

• The cost of the option will be cheap, which carries less capital risk, but the deeper OTM the more risk
3.6 Trade the Underlying is incurred

• Give yourself enough time to be right before expiration (45+ days)

• Max risk is the amount paid for the option

• You want a quick move in your desired direction

 OTM OPTIONS
OTM LONG CALLS (BULLISH)
SWING TRADE PRO 2.0 EXECUTION: Buy the OTM Long Call options (30 Delta or lower) when the price of the underlying
reaches your entry trigger.

3. STRATEGY OTM LONG CALL EXAMPLE:

TOOLKIT XYZ is trading at 100 in Jan and you believe that price has the potential to see a major upside move
to 115 or beyond.

CHOOSE A TRADING STRATEGY Buy the Mar 110 call for 0.35

3.1 Credit Spreads

Risk Profile: 
3.2 Debit Spreads
• Net Debit Transaction: Premium bought (0.35)

3.3 Neutral Strategies

• Maximum Risk: Debit paid (0.35)

3.4 ITM Options • Maximum Reward: Unlimited (∞)

• Breakeven: Strike + net debit (110 + 0.35 = 110.35)

3.5 OTM Options

• OTM Long Calls (Bullish) • Execute this strategy when you anticipate a potentially explosive move to the upside, but would
rather risk the small debit paid (lottery ticket)

• OTM Long Puts (Bearish) • You typically want to see price move in your desired direction quickly, otherwise, time decay will
3.6 Trade the Underlying begin to erode this position

• It is not necessary to hold this trade to expiration, especially if your profit target(s) have been
reached

• Give yourself enough time in the trade (days to expiration) to be right, ideally 45+ days to expiration
 OTM OPTIONS
OTM LONG PUTS (BEARISH)
SWING TRADE PRO 2.0 OBJECTIVE: The objective of using OTM Long Puts is to execute a bearish trade when you are either
extremely bearish or want a “lottery ticket” approach to a trade. This approach reduces the cost of the

3. STRATEGY trade, and also increases the potential return. However, this play is very risky because OTM options do
not have intrinsic value and have greater odds of expiring worthless, thus resulting in complete loss of
the trade.

TOOLKIT Direction: Bearish

Asset Legs: Long Puts

CHOOSE A TRADING STRATEGY When to Use: When you are extremely bearish, or want a “lottery ticket"

Profit Characteristics: Profit increases as the market falls, with unlimited profit potential

3.1 Credit Spreads Loss Characteristics: Max risk is the amount paid for the puts

3.2 Debit Spreads Decay Characteristics: Time decay erodes the value of OTM options at a much higher rate than ITM
options

3.3 Neutral Strategies Max Risk: Capped

Max Reward: Unlimited (to a stock price of zero)

3.4 ITM Options

3.5 OTM Options Strategy:

• Use this strategy when you are extremely bearish

• OTM Long Calls (Bullish) • Go slightly OTM to reduce your cost basis

• Go deep OTM when you want a “lottery ticket” approach to a trade

• OTM Long Puts (Bearish)

• The cost of the option will be cheap, which carries less capital risk, but the deeper OTM the more risk
3.6 Trade the Underlying is incurred

• Give yourself enough time to be right before expiration (45+ days)

• Max risk is the amount paid for the option

• You want a quick move in your desired direction

 OTM OPTIONS
OTM LONG PUTS (BEARISH)
SWING TRADE PRO 2.0 EXECUTION: Buy the OTM Long Put options (30 Delta or lower) when the price of the underlying
reaches your entry trigger.

3. STRATEGY OTM LONG PUT EXAMPLE:

TOOLKIT XYZ is trading at 100 in Jan and you believe that price has the potential to see a major downside
move to 85 or beyond.

CHOOSE A TRADING STRATEGY Buy the Mar 90 put for 0.35

3.1 Credit Spreads Risk Profile:
3.2 Debit Spreads
• Net Debit Transaction: Premium bought (0.35)
3.3 Neutral Strategies • Maximum Risk: Debit paid (0.35)
• Maximum Reward: Unlimited (∞)
3.4 ITM Options • Breakeven: Strike - net debit (90 - 0.35 = 89.65)
3.5 OTM Options
• Execute this strategy when you anticipate a potentially explosive move to the downside, but
• OTM Long Calls (Bullish) would rather risk the small debit paid (lottery ticket) than pay a larger premium
• You typically want to see price move in your desired direction quickly, otherwise, time decay will
• OTM Long Puts (Bearish) begin to erode this position
3.6 Trade the Underlying • It is not necessary to hold this trade to expiration, especially if your profit target(s) have been
reached
• Give yourself enough time in the trade (days to expiration) to be right, ideally 45+ days to
expiration
 TRADE THE UNDERLYING
STOCKS, ETFS, FUTURES, FOREX, CRYPTO
SWING TRADE PRO 2.0 While “trading the underlying” isn’t necessarily an options strategy, sometimes it is the
appropriate strategy for the specific opportunity presenting itself. In this section, you’ll learn
3. STRATEGY the benefits of trading the underlying (buying and selling shares/contracts in stocks, futures,
etc.) versus trading an options strategy. Additionally, you’ll learn how to generate income

TOOLKIT
from a position, and how to hedge a position, using options.

3.6 TRADE THE UNDERLYING

CHOOSE A TRADING STRATEGY — Covered Call (INCOME)

— Protective Put (HEDGE)

3.1 Credit Spreads

— Collar (HEDGE)
3.2 Debit Spreads
3.3 Neutral Strategies Benefits of Trading the Underlying:

3.4 ITM Options • Easy to Understand: Trading stocks and futures is much easier to understand than trading
3.5 OTM Options options, which makes for an easy transition for beginners, as Options can be complex to
understand at first.

3.6 Trade the Underlying

• Covered Call (Income) • Liquidity: Volume and liquidity tends to be much better in the equities and futures markets
versus options, which is extremely helpful in getting filled on entries/exits.

• Protective Put (Hedge)

• Collar (HEDGE) • No Time Decay/Constraint: There is no time constraint on the position, which allows you
to hold for longer time periods of time as markets trend for months or years.
 TRADE THE UNDERLYING
COVERED CALL (INCOME)
SWING TRADE PRO 2.0 OBJECTIVE: The objective of using a Covered Call strategy is to generate income from a
long position in the underlying that you intend to keep for the long term, but are willing to

3. STRATEGY sell if the underlying reaches a specific price (the call strike price).

Direction: Bullish

TOOLKIT Asset Legs: Long Underlying, Short OTM Calls

When to Use: When you are long shares/contracts of the underlying and want to generate
CHOOSE A TRADING STRATEGY income by selling premium

Profit Characteristics: Retain the credit if the call options expire worthless — This is the
3.1 Credit Spreads
ideal scenario for this trade if wanting to generate income

3.2 Debit Spreads Decay Characteristics: Time decay erodes the value of OTM options at a much higher
3.3 Neutral Strategies rate than ITM options, which is very helpful for this trade

Max Risk: Credit received minus any downside risk from owning shares/contracts

3.4 ITM Options Max Reward: Capped to credit received plus any potential gains from share assignment

3.5 OTM Options

Strategy:

3.6 Trade the Underlying

• Use this strategy when you are long shares/contracts and want extra income

• Covered Call (Income) • Use this strategy after you’ve enjoyed a profitable move and are okay with selling your
• Protective Put (Hedge) shares/contracts should the sold strike price be reached and assigned

• Buy shares/contracts and sell calls at the same time to lower cost (“Buy/Write”)

• Collar (HEDGE) • Sell far OTM Calls to generate income and lessen the odds of assignment

• Use this strategy with weekly and monthly options for generating income frequently
 Sell 60 Call (0.24 credit)
TRADE THE UNDERLYING Sell 55 Call (0.65 credit)
COVERED CALL (INCOME)
The objective of using a Covered Call strategy is to
generate income from a long position in the underlying that
you intend to keep for the long term, but are willing to sell if
the underlying reaches a specific price (the call strike price).

TIPS:
— Sell calls when implied volatility is high to
collect more premium, like before earnings

— Sell farther OTM calls if you don’t really

intend to sell your shares

EXAMPLE:
— Sell closer OTM calls if you’ve profited
— Long 1000 shares @ 31.00

quite a bit in the underlying and are ready to

— Sell 10 Aug Weekly (2) 55
exit the position
Call for 0.65 (10 contracts)

— Net Credit: 0.65 ($650)

— Max Risk: 0.65 credit minus

any downside risk from being
long 1000 shares

— Max Reward: 0.65 credit

plus 1000 shares x 24 points
from stock position

EXECUTION: You’re long shares from 31 and want to

Long 1000
generate additional income by selling OTM call options
Shares from 31 at 55 or 60 with earnings due after the closing bell. If CLVN
the strike is reached and the calls are exercised, you
are okay with selling your shares in the underlying.
 TRADE THE UNDERLYING ALTERNATE OPTION: Had the 60 60 Call
COVERED CALL (INCOME) call been selected, it would’ve
The Covered Call strategy offers a great way to book expired worthless. The 0.24 credit
consistent income (weekly/monthly) from a long term would be retained, and there
position in the underlying. This strategy offers a low risk would be no need to sell the 1000
55 Call
share position in the underlying
approach to squeezing out extra profit from a position you
already intend to hold, but are happy to book profits on.
OPTION EXERCISED: ROKU beats
TIPS: on earnings, triggering a rally the
— Use this strategy weekly or monthly to squeeze more next two days, with price closing at
income out of each expiration cycle while you’re holding 58.10. The sold 55 call is exercised,
a long term position
and we must sell our 1000 share
— Use this strategy at the entry of a new long term position in the underlying for 55,
position in the underlying in order to reduce cost upfront giving the trade a 24 point gain.
by collecting the credit of the sold call (“Buy/Write”)

EXAMPLE:
— Value of 10 Aug 55 Call (at expiration): 3.10

— Net Gain: (0.65 credit x 10 contracts) + (1000 shares x 24 points gained) = $24,650

Long 1000

Shares from 31 CLVN

 TRADE THE UNDERLYING
PROTECTIVE PUT (HEDGE)
SWING TRADE PRO 2.0 OBJECTIVE: The objective of using a Protective Put strategy is to protect a long position
in the underlying against a downturn. Execute this strategy when you intend to hold a
3. STRATEGY position in the underlying for the foreseeable future, but want to protect profits in the
event of selling pressure ahead of news or earnings.

TOOLKIT Direction: Bullish

Asset Legs: Long Underlying, Long OTM Puts

CHOOSE A TRADING STRATEGY

When to Use: When you are bullish, but want downside protection

3.1 Credit Spreads Profit Characteristics: Profit increases as the market rises, with unlimited profit potential

3.2 Debit Spreads Loss Characteristics: Max risk is the amount paid for the puts

Decay Characteristics: Time decay will negatively affect the value of the option

3.3 Neutral Strategies Max Risk: Capped

3.4 ITM Options Max Reward: Unlimited

3.5 OTM Options Strategy:

3.6 Trade the Underlying • Use this strategy when you are bullish and want to protect gains from a downturn

• Covered Call (Income) • Buy OTM puts to reduce your cost basis

• Buy ATM or ITM puts if you are confident and want to profit from the downturn

• Protective Put (Hedge) • Ideally, price will rally enough to cover the cost of the protective put, or price will sell off
• Collar (HEDGE) enough to capitalize on the move using the bought puts

• This strategy is a better, although more expensive, alternative to using stop orders
 TRADE THE UNDERLYING
PROTECTIVE PUT (HEDGE)
The objective of using a Protective Put strategy is to protect a
long position in the underlying against a downturn. Execute this
strategy when you intend to hold a position in the underlying
for the foreseeable future, but want to protect profits in the
event of selling pressure ahead of news or earnings.

EXECUTION: You’re long shares in the underlying

from $3/share and want to protect the position by
buying the ATM 3 put ahead of earnings in 9 days.

Long 1000

Buy 3 Put
Shares from 3

EXAMPLE:
— Long 1000 shares @ 3.00

— Buy 3 Aug Weekly (9) 3 Put

TIPS: for 0.30 (10 contracts)

— Buy a Protective Put ahead of earnings, but look to — Net Debit: 0.30 ($300)

buy the option 5 to 10 days ahead of earnings, as — Max Risk: 0.30 ($300)

options will become more expensive as implied — Max Reward: Unlimited (∞)
volatility increases the closer earnings gets

— Buy ATM or slightly OTM puts to reduce cost basis

— Buy ITM if you are confident price will move lower

and you want to profit from the move
 TRADE THE UNDERLYING
PROTECTIVE PUT (HEDGE) TIPS:
The Protective Put strategy offers a great way to hedge a — You can choose to allow the put option to expire ITM and
long position in the underlying ahead of news or earnings. collect the gains to offset the decline in the underlying

— You can choose to exercise the put option at the $3

While more expensive, buying puts offers a better way to strike, which allows you to sell your 1000 shares at $3/share

protect a position than simply using a stop order. — If price were to have closed above $3, you can choose to
allow the option to expire worthless, thus avoiding paying
commission on the exit and only taking the .30 loss while
capitalizing on the rally in the underlying

Long 1000

Buy 3 Put
Shares from 3

Failed Absorption: Price drops through

the absorption zone and sells off ahead
EXAMPLE: of earnings, and then gaps down on the
— Long Shares: 1000 shares x .84 (3 - 2.16) = $840 loss
earnings announcement, closing the
— Value of 3 Aug 3 Put (at expiration): 0.84
week 84 cents below the $3 strike. By
— Net Gain: 0.84 - 0.30 = .54 (.54 x 10 contracts = $540 gain) buying the put, you are able to offset
most of the losses in the underlying.
 TRADE THE UNDERLYING
COLLAR (HEDGE)
SWING TRADE PRO 2.0 OBJECTIVE: The objective of using a Collar strategy is to protect a position in the
underlying by buying puts ahead of news or earnings, while selling calls to help offset
3. STRATEGY the cost of the bought puts. You must be okay with selling your shares in the underlying
if the calls are exercised.

TOOLKIT Direction: Bullish

Asset Legs: Long Underlying, Long OTM Puts, Short OTM Calls

CHOOSE A TRADING STRATEGY

When to Use: When you are long shares/contracts of the underlying and want to
3.1 Credit Spreads protect current profits, but are willing to part with the stock if the calls are assigned

3.2 Debit Spreads Decay Characteristics: Time decay is mostly offset with this position

Max Risk: Limited to the current stock price minus the strike of the put plus the net
3.3 Neutral Strategies debit paid, or minus the net credit received

3.4 ITM Options Max Reward: Capped to credit received plus any potential gains from share
assignment

3.5 OTM Options

3.6 Trade the Underlying Strategy:

• Covered Call (Income) • Use this strategy when you want to protect profits in the underlying ahead of earnings

• Use this strategy to lower the cost of protecting profits

• Protective Put (Hedge) • Use this strategy after you’ve enjoyed a profitable move and are okay with selling
• Collar (HEDGE) should the sold strike price be reached and assigned

• Buy shares/contracts and sell calls at the same time to lower cost (“Buy/Write”)
 TRADE THE UNDERLYING
COLLAR (HEDGE)
The objective of using a Collar strategy is to protect a
position in the underlying by buying puts ahead of news
or earnings, while selling calls to help offset the cost of Sell 4 Call
the bought puts. You must be okay with selling your
shares in the underlying if the calls are exercised.

EXECUTION: You’re long shares in the underlying

from $3/share and want to protect the position by
buying the OTM 3 put ahead of earnings in 9 days,
but will also sell the OTM 4 call to reduce cost
Long 1000

Buy 3 Put
Shares from 3
EXAMPLE:
— Long 1000 shares @ 3.00

— Buy 3 Aug Weekly (9) 3 Put for 0.30

(10 contracts)

TIPS: — Sell 3 Aug Weekly (9) 4 Call for 0.15

— Buy a Collar ahead of earnings, but look to buy the (10 contracts)

option 5 to 10 days ahead of earnings, as options will — Net Debit: 0.15 (1000 x .15 = $150)

become more expensive as implied volatility increases — Max Risk: 0.15 - (3.13 - 3) = .02
the closer earnings gets
(1000 x .02 = $20)

— You can buy the underlying shares, buy the puts, — Max Reward: 1.00 (4 - 3) - 0.15 = .85
and sell the calls all in one transaction to protect the (1000 x .85 = $850)
underlying at the outset of the trade and to lower cost
 TRADE THE UNDERLYING
COLLAR (HEDGE)
The Collar strategy offers a great way to protect a long
position in the underlying ahead of news or earnings,
while looking to lower costs by selling the OTM call. Sell 4 Call
Add the sold call to a Protective Put to create the
Collar when you are okay with selling your position in
EXAMPLE:
the underlying should the sold calls be exercised.
— Long Shares: 1000 shares x .84 (3 - 2.16) = $840 loss

— Value of 3 Aug 3 Put (at expiration): 0.84

— Value of 3 Aug 4 Put (at expiration): 0.00

— Net Gain: 0.84 - 0.15 = .69 (.69 x 10 contracts = $690 gain)

Long 1000

Buy 3 Put
Shares from 3

Failed Absorption: Price drops through

the absorption zone and sells off ahead of
earnings, and then gaps down on the
earnings announcement, closing the week
84 cents below the $3 strike. By buying
TIPS:
the put, you are able to offset most of the
— You can allow the 4 call to expire worthless and allow the put option to
losses in the underlying, and by selling
expire ITM and collect the gains to offset the decline in the underlying

the 4 call you were able to further offset

— You can choose to exercise the put option at the $3 strike, which allows
the loss by receiving the credit.
you to sell your 1000 shares at $3/share, while collecting .15 on the sold 4 call

— If price were to have closed above $3, you can choose to allow the put
option to expire worthless to avoid paying commission on the exit
 PRESENTS

SWING TRADE PRO 2.0

THE 5-STEP SWING TRADING BLUEPRINT
STEP 3: STRATEGY TOOLKIT
 PRESENTS

SWING TRADE PRO 2.0

THE 5-STEP SWING TRADING BLUEPRINT
STEP 4: EXECUTION
 EXECUTION:
EXECUTE THE STRATEGY
SWING TRADE PRO 2.0 While each step in our 5-Step Blueprint is important, You will also learn three techniques for scaling out of
perhaps no other step requires more attention to positions as a powerful form of trade management.

detail, focus, and practice than Step 4: Execution.

Scaling out of trades is the process of gradually

Your goal is to be able to execute your bias in the taking profits as a position moves in your favor, or

4. EXECUTION
market without error, as execution error is generally reducing exposure should a position move against
the most costly of all trading errors. Practice you. These techniques are designed to provide
flawless execution of your strategies for each and consistency, reduce risk exposure, and offer
EXECUTE THE STRATEGY every trade.
flexibility while in trade.

4.1 1x3 Entry Technique In this step, you will learn how to scale into positions Your goal is to be able to execute entries and exits
according to the level of exposure that you’re wiling in any market by using, and combining, the following
4.2 1x2 Entry Technique to take at the outset of a trade.
entry and scaling techniques:

4.3 11 Scaling Technique Scaling into trades is the process of building a Techniques for Scaling Into a Position:
position by first testing the trade with smaller size,
4.4 111 Scaling Technique and then adding more exposure as the position — 1x3 Entry Technique

4.5 211 Scaling Technique begins to work in your favor. This approach is quite
effective, as traders have the ability to reward — 1x2 Entry Technique
winning trades with additional exposure, while
limiting losing trades to smaller losses due to Techniques for Scaling Out of a Position:
smaller starting size.

— 11 Scaling Technique

You will learn two entry techniques that will give you
the ability to scale into positions, thereby giving you — 111 Scaling Technique

an additional lever to adjust in terms of risk

management, alongside trade allocation. — 211 Scaling Technique
 EXECUTION:
1x3 ENTRY TECHNIQUE
SWING TRADE PRO 2.0 1x3 Entry Technique: A 3-part technique used for scaling into a position by thirds. Each scale-in splits
the maximum allowable trade allocation by 1/3 and can have multiple contracts/shares per scale-in.

1x3 Entry Technique:

4. EXECUTION • 1st Entry (33% of Trade Allocation): Execute a starting position by scaling into a third of your
maximum allowable trade allocation.

EXECUTE THE STRATEGY • 2nd Entry (33% of Trade Allocation): Look to add 33% more exposure should price move in your
favor, or if you want to defend your trade.

4.1 1x3 Entry Technique

4.2 1x2 Entry Technique • 3rd Entry (33% of Trade Allocation): Look to add the final 33% of allowable exposure should price
move in your favor, or if you want to defend your trade.

4.3 11 Scaling Technique

• Additional Option: A 1x3 entry technique variation is to execute 50% of allowable trade allocation on
4.4 111 Scaling Technique the 1st entry, and then adding 25% additional exposure on both the 2nd and 3rd entries.

4.5 211 Scaling Technique

1x3 ENTRY TECHNIQUE EXAMPLE:

CORE EQUITY $100,000

TRADE ALLOCATION @ 1.5% $1,500
1ST ENTRY $500 Trade Allocation ($1,500 / 3)
2ND ENTRY $500 Trade Allocation ($1,500 / 3)
3RD ENTRY $500 Trade Allocation ($1,500 / 3)
TOTAL RISK $1500 ($500 x 3)
 EXECUTION
1x3 ENTRY TECHNIQUE
The 1x3 Entry Technique allows traders to build a position in three parts, first by
first testing the trade with smaller size (33%), and then adding more exposure if
necessary (66%). This approach allows traders to reward winning trades with
additional exposure, while limiting losses due to smaller starting position size.

Taking Profits:
After building a
1st Entry (33%): Start an initial successful position
position by executing an entry with during the first 4
33% of trade allocation during the days of rejection
last hour of a rejection day and absorption,
look to pay yourself
on the first major
pop in your favor,
taking either full or
partial profits.
3rd Entry (33%):
Reserve the last
33% of trade
2nd Entry (33%): Add to the allocation to defend
position by executing an entry at/ your position should
1x3 Entry Technique: Allows traders to
near the absorption zone on Day a failed new low
conservatively scale into a position using 33% of
2 with 33% of trade allocation develop on Days 3
allowable trade allocation. Winners get rewarded
and/or 4.
with additional exposure, and trades that
underperform do so on smaller position size.

1x3 ENTRY
 EXECUTION:
1x2 ENTRY TECHNIQUE
SWING TRADE PRO 2.0
1x2 Entry Technique: A 2-part technique used for scaling into a position by halves.
Each scale-in splits the maximum allowable trade allocation by 1/2 and can have
multiple contracts/shares per scale-in.

4. EXECUTION 1x2 Entry Technique:

EXECUTE THE STRATEGY
• 1st Entry (50% of Trade Allocation): Execute a starting position by scaling into half
4.1 1x3 Entry Technique of your maximum allowable trade allocation.

4.2 1x2 Entry Technique

• 2nd Entry (50% of Trade Allocation): Look to add the final 50% of allowable
4.3 11 Scaling Technique exposure should price move in your favor, or if you want to defend your trade.

4.4 111 Scaling Technique

1x2 ENTRY TECHNIQUE EXAMPLE:
4.5 211 Scaling Technique
CORE EQUITY $100,000
TRADE ALLOCATION @ 1.5% $1,500
1ST ENTRY $750 Trade Allocation ($1,500 / 2)
2ND ENTRY $750 Trade Allocation ($1,500 / 2)
TOTAL RISK $1500 ($750 x 2)
 EXECUTION
1x2 ENTRY TECHNIQUE
The 1x2 Entry Technique allows traders to build a position in two parts, first by
first testing the trade with smaller size (50%), and then adding more exposure
if necessary (50%). This approach allows traders to reward winning trades with
additional exposure, while limiting losses due to smaller starting position size.

Taking Profits:
After building a
successful position
during the first 4
days of rejection
and absorption,
look to pay yourself
on the first major
pop in your favor,
taking either full or
partial profits.

2nd Entry (50%):

Reserve the last
1st Entry (50%): Start an
50% of trade
initial position by executing
1x2 Entry Technique: Allows traders to allocation to defend
an entry with 50% of trade
conservatively scale into a position using 50% of your position should
allowable trade allocation. Winners get rewarded allocation at/near the a failed new low
absorption zone
with additional exposure, and trades that develop
underperform do so on smaller position size.

1x2 ENTRY
 1st Scale-In:
Execute 50% of
EXECUTION
trade allocation ENTRY EXECUTION TECHNIQUES
during the last hour
1x2 ENTRY Choose an entry execution technique
2nd Scale-In: Execute 50% of that aligns with the probability of profit
of rejection day
trade allocation at/near the
3rd Scale-In: rejection day midpoint
for a given opportunity. For example, use
Execute 33% of the 1x2 or 1x3 entry technique for
trade allocation countertrend trades, while entering high
after failed new
odds trades more aggressively.
low develops

1st Option: Execute 100%

of trade allocation during
last hour of rejection day

2nd Option: Execute 100%

1x3 ENTRY of trade allocation at/near
2nd Option: Execute 100% of trade the rejection day midpoint
allocation at/near the rejection day midpoint
1st Scale-In: 2nd Scale-In:
100% ENTRY
Execute 33% of 1st Option: Execute 100% of trade
Execute 33% of
trade allocation at/ allocation during last hour of rejection day
trade allocation
during last hour near the rejection
of rejection day day midpoint on
Day 2 or Day 3 100% ENTRY
 1x2 ENTRY
EXECUTION
1x2 SCALE-IN TECHNIQUE 1st Scale-In:
The 1x2 Scale-In Technique is a 2-part Execute 50% of 2nd Scale-In:
trade allocation Execute 50% of
technique used for scaling into a position by during the last hour trade allocation at/
halves. Each scale-in splits the maximum of rejection day near the rejection
allowable trade allocation by 1/2 and can have day midpoint
multiple contracts/shares per scale-in.

2nd Scale-In: 2nd Scale-In:

Execute 50% of Execute 50% of
trade allocation at/ trade allocation at/
near the rejection near the rejection
day midpoint day midpoint

1st Scale-In: Execute 50%

1x2 ENTRY of trade allocation during the 1x2 ENTRY
last hour of rejection day
 EXECUTION:
11 SCALING TECHNIQUE
SWING TRADE PRO 2.0

11 Scaling Technique: a 2-part technique used for scaling out of a position by halves.

4. EXECUTION Each scale-out can have multiple contracts/shares, but ideally there are the same
number of units for each scale-out.

EXECUTE THE STRATEGY

11 Scaling Technique:
4.1 1x3 Entry Technique
4.2 1x2 Entry Technique • 1st Scale: Scale out of half of the position at your first target (T1).

4.3 11 Scaling Technique • 2nd Scale: Scale out of the last half of the position at your second target (T2).

4.4 111 Scaling Technique

11 SCALING TECHNIQUE EXAMPLE:
4.5 211 Scaling Technique
TRADE ALLOCATION 20 contracts
1ST SCALE Scale 1/2 (10 contracts) at T1
2ND SCALE Scale 1/2 (10 contracts) at T2
 EXECUTION
11 SCALING TECHNIQUE
Use the 11 Scaling Technique to scale out of a position in two
equal parts. Look to scale out of 50% of the position on the first
favorable move after building a position, and scale out of the last
50% at your forecasted target zone. This technique is designed
to provide consistency, reduce risk exposure, and offer flexibility.

2nd Scale (50%): Scale 1/2 the

position after price enters your
forecasted target zone, which
completes the trade

11 Scaling Technique:
1st Scale (50%): Scale 1/2 the position after the After building a position
first expansion day in your favor. It is important to within the Rejection Day
pay yourself on partial profits after successfully sequence, look to take
building a position within the rejection sequence partial profits after the
in order to reduce risk and improve well being. first major pop in your
favor, and again after
price reaches your
forecasted target zone.
 EXECUTION:
111 SCALING TECHNIQUE
SWING TRADE PRO 2.0
111 Scaling Technique: a 3-part technique used for scaling out of a position by thirds.
Each scale-out can have multiple contracts/shares, but ideally there are the same
number of units for each scale-out.

4. EXECUTION 111 Scaling Technique:

EXECUTE THE STRATEGY
• 1st Scale: Scale out of a third of the position at your first target (T1).

4.1 1x3 Entry Technique

4.2 1x2 Entry Technique • 2nd Scale: Scale out of second third of the position at your second target (T2).

4.3 11 Scaling Technique

• 3rd Scale: Scale out of the last third of the position at your third target (T3).

4.4 111 Scaling Technique

4.5 211 Scaling Technique 111 SCALING TECHNIQUE EXAMPLE:

TRADE ALLOCATION 300 shares

1ST SCALE Scale 1/3 (100 shares) at T1
2ND SCALE Scale 1/3 (100 shares) at T2
3RD SCALE Scale 1/3 (100 shares) at T3
 Use the 111 Scaling Technique to scale out of a position by thirds (33% for each
EXECUTION scale). Look to scale out of 33% of the position on the first favorable move after
111 SCALING TECHNIQUE
building a position, and then trim 33% twice more as price moves in your favor.
3rd Scale (33%): Scale final 1/3
position inside the forecasted
target zone after a failure to hold
1st Scale (33%): Scale 1/3 yHI, which completes the trade
position at the end of the
first breakout day after
building a position within
the rejection sequence
2nd Scale (33%): Scale 1/3
position after price enters
your forecasted target zone

111 Scaling Technique: After building a position Add Back (33%): After scaling 1/3
within the Rejection Day sequence, look to take partial position the previous session, you have
profits after the first major pop in your favor, and again the option to add the 1/3 scale back to the
after price reaches your forecasted target zone. position upon a retest of the secondary
absorption zone the next day
 EXECUTION:
211 SCALING TECHNIQUE
SWING TRADE PRO 2.0
211 Scaling Technique: a 3-part technique that is used for scaling out of a position by
half at first, and then by quarters. Each scale-out can have multiple contracts/shares,
but ideally the first scale has twice the size as the second and third scales.

4. EXECUTION 211 Scaling Technique:

EXECUTE THE STRATEGY
• 1st Scale: Scale out of half of the position at your first target (T1).

4.1 1x3 Entry Technique

4.2 1x2 Entry Technique • 2nd Scale: Scale out of a quarter of the position at your second target (T2).

4.3 11 Scaling Technique

• 3rd Scale: Scale out of the last quarter of the position at your third target (T3).

4.4 111 Scaling Technique

4.5 211 Scaling Technique 211 SCALING TECHNIQUE EXAMPLE:

TRADE ALLOCATION 4 contacts

1ST SCALE Scale 1/2 (2 contracts) at T1
2ND SCALE Scale 1/4 (1 contract) at T2
3RD SCALE Scale 1/4 (1 contract) at T3
 EXECUTION
3rd Scale (25%): Scale final 1/4
211 SCALING TECHNIQUE position on the pop after earnings,
Use the 211 Scaling Technique to scale out of a position in three which completes the trade
parts. Look to scale out of 50% of the position on the first favorable
2nd Scale (25%): Scale 1/4 position
move after building a position, and scale out of the last 50% in two upon a retest of recent highs, leaving
parts as the trade progresses. This technique is designed to just a 1/4 position heading into earnings
provide consistency, reduce risk exposure, and offer flexibility.

1st Scale (50%): Scale

1/2 position at the end of
the first breakout day after
building a position within
the rejection sequence

211 Scaling Technique: After building a position within

the Rejection Day sequence, look to scale the position
in three parts, typically by scaling 50% of the position
at first, and then scaling twice more in 25% scales.
 PRESENTS

SWING TRADE PRO 2.0

THE 5-STEP SWING TRADING BLUEPRINT
STEP 4: EXECUTION
 PRESENTS

SWING TRADE PRO 2.0

THE 5-STEP SWING TRADING BLUEPRINT
STEP 5: DOCUMENTATION
 DOCUMENTATION:
DOCUMENT THE RESULTS
SWING TRADE PRO 2.0 Step 5 of our 5-Step Blueprint captures the importance of proper and routine
Documentation, including periodic review of such documentation. In order to improve as
a trader, you must learn from experience, including learning from losing and winning
trades alike. This process allows you to identify patterns from your performance history
that may reveal strengths you can build upon, or weaknesses to improve upon. While
5. DOCUMENTATION documentation is an often overlooked aspect of trading, it is a vital and necessary
DOCUMENT THE RESULTS routine for serious traders.

5.1 Entry Documentation In this section, you’ll learn how to properly document your trades, including entry and
5.2 Exit Documentation exit documentation. Remember, it is not enough to simply document the results, you
must also periodically review your documentation and results in order to reveal
5.3 Trade Log & Review tendencies that may be helping or hindering your trading.

DOCUMENTATION:

• Entry Documentation: You’ll learn how to document a trade at the entry

• Exit Documentation: You’ll learn how to document a trade after the final exit

• Trade Log & Review: You’ll learn what to include in a trade log and trade journal, and
also learn about the importance of periodic performance review.
 DOCUMENTATION:
ENTRY DOCUMENTATION
SWING TRADE PRO 2.0 In this section, you’ll learn how to properly document your trades at the outset of a position
— at the entry. An efficient approach to entry documentation is to take a screenshot of the
chart, followed by annotating the chart with notes that include the following information:

1.TRADE ALLOCATION: Note the trade allocation that you have chosen for the trade.

5. DOCUMENTATION
DOCUMENT THE RESULTS 2.SETUP: Note the setup that you have chosen to trade.

5.1 Entry Documentation 3.STRATEGY: Note the strategy that you will be executing from the toolkit.

5.2 Exit Documentation

4.ENTRY ALLOCATION: Note the execution technique that you will be using to enter and
5.3 Trade Log & Review manage the trade.

5.TARGETS: Note the profit targets that you have forecasted for the trade

6.ENTRY PRICE: Note the entry price for the trade, including taking a screenshot of the
option chain if need be

7.TRADE NOTES: Jot down pertinent notes for the trade, including current or foreseen
market conditions, confluence zones, general trade thoughts, etc.

NOTES:

— Strong uptrend with rejection day at CLVN

— Rejection at 8/21 PEMA trigger zone

— Expecting price to close above 1800 by expo 7/27

— Expecting good earnings and positive reaction,

with upside target at 1860
 DOCUMENTATION:
EXIT DOCUMENTATION
SWING TRADE PRO 2.0 In this section, you’ll learn how to properly document your trades at the conclusion of a position.
For the sake of efficiency, take a screenshot of the chart once you’ve completely exited the
position, and then annotate the chart with notes that include the following information:

1.EXIT PRICE: Document the exit price(s) for the trade, including all scales

5. DOCUMENTATION 2.PROFIT/LOSS (PNL): Document the PNL for the trade

DOCUMENT THE RESULTS

3.PERCENT ROI: Document the gain/loss as a percentage of initial investment (ROI)

5.1 Entry Documentation

5.2 Exit Documentation 4.DAYS IN TRADE: Document the number of days in trade

5.3 Trade Log & Review

5.MAX ADVERSE EXCURSION (MAE): Document the farthest price went against your entry
price while the position was still in trade

6.MAX FAVORABLE EXCURSION (MFE): Document the farthest price went in your favor
from the entry price while the position was still in trade

7.TRADE NOTES:
• Document what went well for the trade

• Document what could have been improved for the trade

• Document any market conditions that may have positively (or adversely) affected the trade
 DOCUMENTATION:
TRADE LOG & REVIEW
SWING TRADE PRO 2.0 In this section, you’ll learn what to include in a proper trade log and journal, including suggestions for
periodic trade and performance review. Here’s what to include:

1.TRADE LOG (SPREADSHEET): It is important to keep a log of all trades, including any and all
pertinent information as it relates to the trade.

5. DOCUMENTATION 2.TRADE JOURNAL: It is important to keep a trade journal, either handwritten or digital (or both), that
will allow you to jot down notes on the market, for trades, market insights, etc, which should be
DOCUMENT THE RESULTS review periodically.

• HANDWRITTEN NOTEBOOK

5.1 Entry Documentation • DIGITAL NOTEBOOK (EVERNOTE, ONE NOTE, ETC)

5.2 Exit Documentation

3.TRADE REVIEW: Periodic trade review is extremely important, as it allows you to improve upon
5.3 Trade Log & Review weaknesses, and build upon strengths.

• DAILY REVIEW

• WEEKLY REVIEW

• MONTHLY REVIEW

• MILESTONE REVIEW (e.g. EVERY 100 TRADES)

4.JOURNAL REVIEW: Periodically reviewing your trade journal is also important, as it allows you to
review your notes on prior market conditions, analysis, and forecasts, and to measure how these
eventually turned out in the future.

• WEEKLY REVIEW

• MONTHLY REVIEW

• SPECIFIC REVIEW
TRADE RECAP: 

• $AMZN developed a rejection day at the critical market structure CLVN of 1780

• The rejection also coincided with the 8/21 PEMA trigger zone

• The rejection of this level suggested a rally to previous market structure resistance — at around 1860

• Earnings on Friday (7/27), and expected to beat and for price to move higher

• The trade went in my favor immediately, reaching the 1860 target in 2 days

REINFORCING THE GOOD:

• I executed a precision entry after morning rejection, believing that bullish absorption was already
occurring off the 1780s

• I held steadfast to my belief that price would close above 1800 by the end of the week, even under
extreme conditions after earnings were released, including:

- Price initially dropping to as low as 1806.96 after earnings were released (my heart rate was
clocked at 71bpm during this time) 

- Price gapped up the next day after earnings to 1880, but then dropped all the way to 1806.53 at
around noon on expiration day, before settling above 1800 for the week


NEED TO IMPROVE:

I had at least two different chances to buy back my put spread for .05, but instead decided to hold

- IMPROVE: Look to take quick profits on a credit spread if .05 can be had early in the trade. This
will give you quick profits, and allow you to begin putting new money to work on another
opportunity.

- TAKE ACTION: As soon as the credit spread is executed to open the position, execute an order
to close the position for .05. This will help semi-automate the process and take the money when
it is there for the taking.
 PRESENTS

SWING TRADE PRO 2.0

THE 5-STEP SWING TRADING BLUEPRINT
STEP 5: DOCUMENTATION
 PRESENTS

SWING TRADE PRO 2.0

THE 5-STEP SWING TRADING BLUEPRINT
with Frank Ochoa
President and Founder, PivotBoss, LLC
Author, Secrets of a Pivot Boss