Swing Trading and Market Timing Knowledgebase

By: John Crane, swing trading guru

Reverse / Forward Counts

The key to predicting a future trend futures market timing reversal is the reverse/forward count. Once the Reaction swing has been identified, I begin with the reverse count because it will give me the length of the action segment of the cycle. I can then use this information to forecast the reaction (future) futures market movement. The reverse count is a count of price periods backwards in time. The count starts at the beginning of the Reaction swing and counts in reverse to the beginning of the previous Reaction swing. This is the same whether in an advancing or declining futures market. In other words, in a downward trending futures market the reverse count will always begin with the first price bar to the left of the lowest closing price bar of the pivot at the beginning of the Reaction swing and count back to the lowest closing price bar of the previous Reaction swing. On the other hand, the reverse count, in an upward trending futures market, will always begin with the first price bar to the left of the highest closing price bar of the pivot that begins the Reaction swing and count back to the highest closing price bar of the previous Reaction swing. (Please note: When a holiday falls on a trading day, it is counted as a regular day.)

The forward count is simply the reverse count applied forward in time. The forward count begins with the first price bar after the end of the Reaction swing and goes forward in time the same number of price bars that the reverse count went backwards. Remember, the end of the Reaction swing, in an upward trending futures market, is the lowest close of the downward price correction, and is the highest close of an upward price correction in a downward trend.

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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.