(binned per thread starter’s request) Measured Swing Trading

This introductory post to this thread was changed on 4/5/2020.

Instead of creating a PDF I will be using this introductory page as a place to more clearly explain this method of trading. Starting on page 5 post 93 of this thread will also begin the same explanations of this thread. The difference will be that on this first page the posts will be condensed. Starting on page 5 post 93 the explanations will be interspersed among other posts dealing with current markets and trades.

While this thread is posted in the "Trading Systems" category of FF it is systematic only in the way price is examined (systematically). It is not a thread that tells you to buy or sell when this or that happens. It will identify prime areas where trades should or might be considered. In addition this thread starter will post his trades live and on a live funded account. This is done not to show off but to demonstrate to others the thread-starters commitment to this method. The thread starter assures you that there will be wins and losses and the absolute number of losses is likely to exceed wins. It is only because of proper money management that one is able to be profitable over the long term in trading.

Two major themes will dominate this thread:

1. Price Swings (PS).

2. Price Action (PA).

PRICE SWINGS
This graphic representation serves to demonstrate the definition of swings. It would serve one well to study many charts and practice identifying swings using these definitions.
Attachment g

This graphic representation serves to demonstrate that swings are made up of impulses and corrections. It would serve one well to study many charts and practice identifying impulse swings and corrective swings using these definitions.Attachment g

This is an idealized chart demonstrating the most basic underpinnings of swing trading as will be explained in this thread. Understanding the definition of a swing is crucial.

While there may be vague similarities Elliot Wave theory will not be used in this thread.

Every impulse wave is made up of smaller waves.
Every corrective wave is also made up of smaller waves.
This occurrence in swings can be exploited.

This is a 60 minute EURUSD live current chart.

On the left price is swinging up. The red diagonal lines signify similar sized swings on the way up. Notice what happens with the last swing at the top. It gets taken out to the downside. Then price starts swing down on the right.

The last impulse swing on the left uptrend (orange) actually becomes the first"corrective" swing for the right downtrend. We can use this first corrective swing to measure and compare swings on the way down on the right side. We also measure other smaller swings on the way down on the right side. Notice the pink swings which are smaller than the orange swing. Currently at the bottom of the chart price is trying to swing up and is bigger than the pink swings but not quite as big as the orange swing.

At first this analysis may seem odd but it is the basis for understanding price movement. We haven't looked at other details but we will.

This is the same chart as in the previous post: EURUSD60min.

I've cleaned it up. The red diagonal signifies the largest swings. The blue diagonal signifies the next largest swings. The diagonals are merely used to measure the swings. This is a very objective way to clarify a chart and what is happening on the chart.

It can be seen that the blue swing has been taken out and that the current swing up is the same as the red swing.


Zooming in a bit closer it can be seen where price is in relation to price action on the left where a Wide Range Bar or WRB gap occurred showing where sellers were willing to take price down. We know sellers were here. Although one can sell this area one can also wait to see what price does to confirm selling.

Step-by-Step guide to follow a market:
1. Choose a frame. In other words how much data do you want to evaluate. There is no perfect amount of data but I think in general less is more. This also is the same as asking how big or small you want your bars or candles to appear.
2. Identify the biggest swings then identify the next biggest swings. In the chart below the red swing is the biggest and the blue swings are the next biggest. Don't obsess over perfection. Also notice that in this chart only an uptrend is being shown.
3. When price begins swinging down the other way we do the same thing and start measuring swings on the way down.

So far we're just learning to follow the swings. No trading yet.

GBPUSD 60 min
1. Red corrective swings on the way up.

2. After last high price descends further than length of projected red swing and then price begins swing down.

3. Notice last blue impulse becomes projected corrective swing on way down.

4. The last corrective blue wave nearly landed in an area where sellers showed themselves. Notice the green arrow pointing to a WRB gap that took out the blue impulse wave low. This is where sellers revealed themselves and is a perfectly good place to sell. Price didn't quite get back to this exact area but can you see how projecting the measured swing helped identify a potential trade?

GBPJPY60 minute

1. Notice uptrend on left followed up by marking correction waves.

2. Last blue impulse wave taken out by powerful bears.

3. Red correction fails to make a new high at the projection of the blue corrective wave where bears showed themselves. It is difficult to see how selling in this area is kind of obvious?

From here I will begin posting live charts with waves marked as I have been doing in all the above examples. I concentrate on about 8 pairs and sometimes will throw in a futures chart of the S&P or NQ.

It is my hope that some will participate and post charts with questions. Although I've tried to give clear explanations above I can see how it might be confusing.

I welcome your questions, your charts and your thoughts.

Really good prediction. it is very useful for all traders.

Would you please define a swing objectively? Thanks.

Regards,
Blackeagle

Winston,
Thanks for this thread and its simplicity, I added some tools to my chart to define the swing visually and also how to enter trades.
Hope my chart is not breaking any rules.


Roy

Hello Blackeagle! Welcome.

A new high validates a low
A new low validates a high

Hello Earlroy! No rules broken LOL but can you clearly explain your chart?
Also you said "how to enter trades". Can you also explain.

I've alluded to trade entries on a couple of my previous posts but I haven't gone into detail. Essentially trades will be found as one follows the market with swings. As the thread continues I plan to demonstrate how measured swings can be projected then used to identify potential entries. I prefer to use live examples rather than cherry pick.

Using this NZDUSD 60 minute chart I'll go through a typical example of how I analyze a chart. I don't always put all the markings you'll see here but they are just to illustrate.



I start by marking the obvious corrective swings. I don't mark impulse swings. Here the red is the largest corrective wave and the blues are the next biggest corrective waves.


Now I clone and move the swing projections to the bottom of the chart where current price action is at. Now I wait for price to swing up. If price keeps going down I move the projections down.


Now I look at what price has been doing and decide if there are any possible trades at the projections. Notice where sellers have been. Notice where buying effort has been reversed. We are not necessarily looking for exactness at the end of the projections rather they point to and alert us to get interested in what is going on.

Winston,
NZDUSD
Using your simple strategy and my tool that would be my Sell Entry.

I really do not want to say more until I see your methods for entries.

Roy

Sorry to disappoint you but there is no particular method to entries. Entries are based on logical analysis of the market based on swings. The system is in following the market. Entries are not systematic, nor should they be.

Preferably all charts posted in this thread should be explained upon their posting. No secrets. No mysteries.

Overall context on NZDUSD 60 min.


Buyers showing themselves.

EURUSD60min.
First chart is for context.



Second chart: Red swing was largest swing until the blue swing at the top of this uptrend. The blue swing is not official since it did not make a new high so it is possible that it could be the first swing down. The pink hands point to WRB gaps.

USDCHF60min
Price has swung up at the bottom of this downtrend taking out the blue swing projection. Buyers showing interest.