GETTING INTO THE SWING OF THINGS
Don asked about Swing points yesterday and whether or not I use these types of things. The answer to that is yes. The above chart has 3 different time frames of Swing points, and this is the best way of getting a quick overall view of what the structure of a market really is. In this case, the Blue points are the shortest time frame swings. You can see in this case with the Gold market, all three time frames show the trend up, so that is in general the direction that should be traded. It is always clear after the fact just like anything else, but I do find it helpful if I get a short term swing point in my direction on an entry bar.
I have researched these just straight up buying and selling whenever a new higher low or lower high was made. This results in a about a 50% win percentage in most markets, so it is not the holy grail. It is a very noisy way to trade, but there is one thing it does accomplish. You will catch most of the big moves in the markets if you do it. I tried it with real money in the Bernanke 100 about 6 months ago with just one contract playing around, and of course it lost 5 straight times getting whip sawed back and forth during a trading range. It was just bad luck that I happened to start right when that happened, but it was ok because I wanted to get a true reality of what it would be like to trade like that to see if I could do it. At the time I was using this as a primary entry technique with just one other thing and the test results were very good. I wanted to see if I could actually execute what would be a ton of trades since often the short term swings change daily. I just could not do it, and I left with a mixed impression of how important this was.
However, that does not mean there is not an edge to swing points. That was one specific way I chose to trade them mechanically, it is not the end all. I think they are important particularly in assessing longer term trends. Also, just in looking at charts over and over it is clear they matter. I do want the swing points in the direction I am looking to trade whenever possible, and most of the trades I make that do well do have this going for them. Trap trades, which are those that make new highs or lows and immediately reverse, obviously do not have Swing points in sync with the entries.
I would welcome any research that anyone has done on these, because I find I just do not have the time to research them the way I would like to. Don, if you have done any please let me know.
Here is the current Swing Picture in the Bernanke 500, as you can see if today's low gets taken out Monday, that would confirm today as a lower short term high than the highest Swing Point. This is interesting to me in that my weekly trend stuff is still showing the trend has turned down, so I really am looking for a short up here but don't have enough to go with it yet.
This is certainly not the ideal swing point formation, but you can nit pick anything. Technically it will be one if today's low is taken out on Monday. That is still not going to be enough for me it appears at this moment but as we know things can change quite a bit in a few hours.
One thing I am incredibly tired of now is this proclamation of this end of the world disaster if the debt ceiling is not raised. Can you remember the last time everyone told us about a disaster in the making and they were correct? None of these guys told us in 2000 or 2007 about the stock crash coming. None of them told us about the Real Estate Collapse in advance. Remember Y2k anyone? What a joke that was. Yes there were a few people here and there that were right about these things in advance but certainly the majority of "experts" were not. Medicare payments would not be withheld unless Barry decided to do that even in a shut down. I am so sick of these liars telling us about this incorrectly to further a political agenda. Some otherwise credible people have fallen into this trap which is disappointing. You believe the Treasury secretary who is a tax cheat?
Ignore all that crap because that is what it is, crap. It appears the Sugar sell setup is now messed up with today's large up move, although a trap pattern could now be at hand.
Have a nice weekend