Swing Trading and Market Timing Knowledgebase

By: John Crane, swing trading guru

Trial Day Hogs

Figure # 6.22 - An eleven-day rally preceded the September 23 swing trade date. A short-term swing pattern formed right before the futures market surged to a new high on the swing trade date and closed at 71.20, near the high of the daily trading range. The trail day opened above the previous day’s high and reached 71.80 before the futures market turned lower and closed at 70.82, below the opening price. The trail day directional indicator had just signaled a trend reversal and the beginning of a new downward trend that didn’t end until December Hogs reached 63.50 on October 13.

Trail Day Dow Jones

Figure # 6.23 - The December Dow Jones made a new contract high on the November 18th Reversal date when the price pushed above the previous high made several weeks earlier. The swing trade date closed near the high of the daily price range. This is the point where a decision has to be made. Should the long position be closed out because the swing trade date has been reached and the futures market is sitting at a new high, or should the protective stop be placed underneath the low of the swing trade date and the trade continued?  If the latter is chosen, the trail day can be used as the final directional indicator.

day trail1
Figure # 6.22 – December 2004 Hogs

The trail day opened above the previous day’s high and continued higher into the close. The trail day directional indicator had just confirmed a continuation of the upward trend and the futures market continued higher over the following six days.
day trail2
Figure # 6.23 – December 2005 Dow Jones

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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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