Swing Trading and Market Timing Knowledgebase

By: John Crane, swing trading guru

Pivot Points

A Reaction Swing strategy will always begin and end with a pivot point. A pivot point contains a minimum of five consecutive price bars where the highest closing price (for a high pivot) is preceded by two price bars with lower closes and is followed by two consecutive price bars with lower closes. A low pivot is where the lowest closing price is preceded by two higher closes and followed by two consecutive higher closes. See Figure # 2.2

Figure # 2.2 –Pivot low and Pivot high

In other words, if the futures market is trending downward, a bearish Reaction Swing strategy forms when the futures market makes a low pivot and trades higher - against the prevailing trend - followed by a high pivot where the futures market timing reverses and resumes the downward trend without trading above the previous pivot high.

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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.