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The Master Plan is a set of rules that determines when to enter and exit a trade. At first, it might seem a little complicated, but once you have place a few trades using the system, you’ll realize it’s really quite simple. The best part about the Master Plan is that you don’t need to use judgment. The rules are mechanical. Two obstacles to successful trading are the human emotions of fear and greed. By following the Master Plan, these emotions will not influence your behavior, nor will they interfere with your success.
To keep it simple, we’ll first focus on the long trade. The rules for a short trade are simply the mirror image of the rules for a long trade. An example of a long swing opportunity is shown below. The price has declined (pulled back) and you are bullish on the stock.