Swing Trading and Market Timing Knowledgebase

By: John Crane, swing trading guru

Market Tells

An old time trader who was also an avid Poker player once told me that trading and poker are similar in many ways; but not in the way many people think. New poker players always learn the different hands (card combinations) and the odds of winning with each. They concentrate on betting strategies and the rules of the game. He insisted that even though all this knowledge is necessary and important, it is not the key to becoming a consistent winner. When I asked him what he meant by this statement, he said, “People; you have to learn to study people. Once you learn this, you can tell what they are about to do without them even knowing they have already tipped their hand.” He went on to explain that veteran poker players study the other players at the table. Veteran players play very cautiously, at the beginning of a game, and do not play aggressively until they start to notice small, normally unnoticeable characteristics about their opponents. These can be such things as a player seeming more nervous when he’s bluffing, or another who holds his cards differently when he thinks he has a winning hand. Whatever these characteristics are, they can give an edge to the player who is aware enough to identify these tendencies. In the poker world, these tendencies are known as “Tells.”

The futures markets are similar to poker players in that the futures markets also exhibit “Tells” or certain characteristics that can give clues to future futures market timing price action. If you are aware of the Tells, they can forewarn you of a price move about to happen. There are probably enough “Tells” to fill an entire book, but in this chapter I will limit the “Market timing Tells” to the ones that are extremely useful when combined with Reversal dates and Action/Reaction trading method.

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**THE RISK OF LOSS IN TRADING CAN BE SUBSTANTIAL. YOU SHOULD, THEREFORE, CAREFULLY CONSIDER WHETHER SUCH TRADING IS SUITABLE FOR YOU IN LIGHT OF YOUR FINANCIAL CONDITION. HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN INHERENT LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING. ALSO, SINCE THE TRADES HAVE NOT ACTUALLY BEEN EXECUTED, THE RESULTS MAY HAVE UNDER OR OVER-COMPENSATED FOR THE IMPACT IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT.NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFITS OR LOSSES.