Trading Plan Lite

Trading Plan Summary – Trading EveryDay Leroy Rushing 10/4/2008 Trading EveryDay LEROY N RUSHING JR

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Trading Plan Summary – Trading EveryDay Leroy Rushing Trading Plan Summary

2008

1) Pre-Market Analysis – [Overall Market Gapping Up/Down] Futures

Stocks

Review daily E-mini Futures Nasdaq, S&P, Dow, & Russell E-mini Futures contracts candlestick

Review stocks from Top 25 lists that are gapping up/down (at least $0.50+ / 1k+ shares) Identify stocks with most significant shock value to supply/demand on daily charts.

charts. Using multiple timeframes (for example, 65/15/5/2

Add stocks to watch list.

minute) and a top-down approach, Start with the daily charts by looking for candlestick chart patterns to support or not the trend direction.

Shock value (i.e., look for “significant” candlestick chart patterns using multiple time frames) Bull / Bear Trap Plays (Daily Charts) Bullish / Bearish Gap into Prior Bar (Engulfing Patterns)

Use “2 & 5 min Charts” first 30 minutes

Trend Continuations/Reversals (2 & 3 Bar Reversals)

Countertrend trades should use a Scale-in (i.e., Probing) method for entries.

2) Momentum & Scalp Trading Using watch list of 10-15 NASDAQ stocks, look for stocks that mirror the NASDAQ, S&P, Dow & Russell E-mini Futures contracts on 5/15 min charts w/ patterns for momentum trades or with ANY shock value. (possible countertrend trades) Buy stock setups when stock above r20ma and r200ma and

Short stock setups when stock below d20ma and d200ma &

E-mini contracts above r20ma

E-mini contracts below d20ma

3) Mid-Day Doldrums Continuously review “Gap list” and look at “30 min Breakouts” indicators on stock list Limit trading to managing existing trades; unless “strong” trending market (Stages 2 or 4) exists; supported by market internals then Use 15 min charts with mostly non-overlapping candlesticks Buy Stage 2 “clean” higher lows setups

Short Stage 4 “clean” lower highs setups

4) Late-Market (Final phase) Trading Review following scans for setups: Daily “Gap Plays” and primary “Watch list” lists for potential late day breakouts & Review 6 / 15 / 30 min Breakouts for stocks continuing to trend with momentum or with Shock Value

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Trading Plan Summary – Trading EveryDay Leroy Rushing Trading Plan Summary

2008

5) Setups, Patterns & Targets Use 6 / 15 / 30 min High/Low Strategy: Buy on p/b when stock breaks 30 min High & above 20 MA

Short when stock breaks 30 min Low & below 20ma

r20ma > r200ma or r20ma & extended below 200ma

d20ma < d200ma or d20ma & extended above d200ma

( W – pattern)

( M – pattern)

Buy stocks and Options (Calls) when transitioning from Stage 1 to Stage 2 (up trending) after they pull back & retest minor support of Stage 1 breakout;

Short stocks and Options (Puts) when transitioning from Stage 3 to Stage 4 (down trending) after they pull back & retest minor resistance of Stage 3 breakdown;

Wait for retest of minor support and Buy Signals for entry - Target previous high for profit taking

Wait for retest of minor resistance and Sell Signals for entry - Target previous low for profit taking

6) General Trading Guidelines: Only use the following as a part of trading: Never enter stock/option position unless entry, trailing stop, and target are known in advance. Before entering any trade, confirm what Market Cycle Phase Stock and Futures are in. Three (3) day sell rule on any positions that don't realize any profit. (No exceptions)

7) Money Management: Use the money management calculator to determine the share size for each stock trade For options, never purchase more than 10 contracts in any one position / account Use “scale in” strategy to enter all positions; maximum of (10) contracts on initial entry Losses

Profits

Never trade stocks that have an average daily volume of less than 500,000 shares.

As a stock/option trade is executed, a trailing stop loss must be established based on Buy setups or Sell Setups pivot and never decreased.

The maximum loss per trade on stocks shall not exceed 2.0 % of the total working capital. Once a stock trade reaches 1/2 the profit target, move stop loss immediately to breakeven. It is understood that losses are an unavoidable aspect of trading and should be considered nothing more than the cost of doing business. The operator will strive to maintain this objectivity at all times.

Consistently focus on trading habits, small trading profits is the ongoing goal. Attempting to hit homeruns will continue to lead to strikeouts and failure. Must contribute 10% of all profits to the insurance policy fund for catastrophic losses. This plan is a living document and it is expected to change over time as the operator becomes more proficient. However no changes are to be made on the spur of the moment, during the course of a trading day, or while the operator is holding a position.

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Trading Plan Summary – Trading EveryDay Leroy Rushing Trading Plan Summary

2008

The following Descriptions of Error should be used to evaluate violation of the trading plan outlined above: 1. Taking illegitimate trade pattern 2. Ignoring greater market trend 3. Pre-empting entry 4. Hesitating on entry, then chasing 5. Improper position sizing 6. Improper placement of stop loss 7. Violating stop loss 8. Pre-empting stop loss 9. Failure to use trailing stop 10. Improper placement of targets 11. Taking profits early 12. Averaging down

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