Swing Trading and Market Timing Knowledgebase

By: John Crane, swing trading guru

Swing Trading Bonds

Figure # 5.1 - After trending lower for over three weeks, the September 2004 T-Bonds closed at 109-31 on July 20. The close was near the bottom of the daily trading range and one day before the projected July 21 swing trade date, marked as (E).  The following day dipped to a low of 109-12 before it closed at 109-31. The next day—July 23—T-Bonds pushed to a high of 111-12 and closed at 110-23, (F) where it completed a three-day corrective swing pattern. Based on this formation, a possible short-term continuation pattern had formed and the futures market timing was poised to turn and continue the downward trend. The Reaction swing strategy consisted of three trading days, counting the low close on July 20 and the high close on July 23.

However, that is not the only clue that suggested we’re dealing with a strong trending futures market. The low of previous Reaction swing strategy (C) was 114-19 on July 8, well above the July 23rd high of 111-12.

In the previous chapter I talked about entry signals for the Swing Trading Strategy TC pattern, but just for review, a sell stop should be placed below the low of the Reaction swing strategy to enter a short position as soon as the pattern is confirmed. 

bonds chart16

Figure # 5.1- September 2003 Treasury Bonds

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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.

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