The SwingSpot Progressive System

Hello and welcome to the thread. I have been debating whether or not to put this up on the forums as I've wanted to let this go commercial nut have since decided against it. I have always been a proponent of long term trading because of many reasons like earning swap, less whipsaw action, less required screen time, etc... I really wanted to develop an easier daily system and have posted a few, but they're okay at best, meaning they have very good structure and they have the ability to produce profits, but are either too financially dependent (large initial accounts) or have a few inherent flaws that couldn't be rectified properly and eventually headed to Forex Factory "Limbo", as I call it, to be never looked at again.

After starting up and doing some trading for friends and family, I soon realized that I needed a daily system so I could have the time to devote to my other business and my family. So, hence, I present the SwingSpot Progressive Daily System.

The Components

The first two indicators, Laguerre and Trend power, I have used previously in other systems using them for entry points. This time they help me scale out my exits instead.

The next two indicators, SwingSpot Pro and SwingSpot Trigger, are indicators that I've modified to fit this strategy. SwingSpot Trigger is a modified version of a ZigZag indicator to show all placements of the arrows before the actual movement occurs (because the ZigZag does repaint). As we all know, repainting indicators are of no use and this indicator is only alerting us or "triggering" the possibility of an upcoming trade, no more, no less. SwingSpot Pro is a modified version of the SuperGain indicator which is actually used to initiate the trades.

I've also added another indicator called the Spread/Swap Monitor. It tells us what the Spread, Buy Swap, and Sell Swap rates are right on the chart. And since we are looking for trades with positive swap, this will come in very handy so you don't have to check your MarketWatch all the time to check swap rates.

I've added 2 templates as well. SwingSpot Pro 1 is a more aggressive version of SwingSpot Pro 2, which is what I'm using for my trading and the examples I post.

The System

The system is very simple and easy to understand. Also, these trades will incur some length, averaging anywhere from a few months to almost 2 years, so if you have no patience or discipline and can't keep an open mind, don't waste your time. This can be used in large or small accounts and trades can be scaled in and out using your own money management preferences.

Before I start, please do not come into the thread and suggest to change parameters, change the entry/exit rules, or add other indicators you think will work better! If you want to change anything, do it on your own or open a different thread.

Okay, now that that is said, let's start with how a trade is triggered. As I mentioned in the first post, we want to take trades with a positive swap rate, this will help us with lowering any damages from any losses that may occur. I try to use pairs with at least a swap rate of 1.50 or higher. I feel anything less than that is wasting your time and can hinder profitability. You may use whatever you desire though. As usual I will be using Go Markets for my charts and I will be using these pairs only if you'd like to follow what I see:

Eur/Chf, Eur/Usd, Eur/Jpy, Nzd/Jpy, Nzd/Usd, Aud/Nzd, Eur/Nzd, Aud/Cad, Aud/Jpy, Aud/Chf, Aud/Usd, and Eur/Aud.

Gbp/Aud is another great pair for swap, but data is limited on Go Markets, so I will leave it off for now.

Once you have your pairs setup, we will be first looking for a trigger, then an entry point. I'll use the Aud/Cad chart for this example. The triggers are the smaller, lighter colored arrows and the entry points are the larger, darker colored arrows (see first pic). Once we have the first trigger, we need to wait for an entry point arrow to appear before we make our move. After the trigger, an entry point must present itself within sixty (60) days or the trigger is no good. Also, in this example at each entry point, the Trend Power must be below -.9 (vice versa if a sell) and the Laguerre must be at or below .5 (again vice versa for a sell). Now, you may only have one entry point or numerous entry points after a trigger, so make sure you take that into consideration regarding your lot sizes. On this particular swing we have our first trigger on 10/08/08 (yes, I know it is over two years ago) and two entry points within our 60 day window. Don't worry about the dates on these examples, some of these example are actually the current swing that has finished and remember I mentioned at the top of this post that these trades you take can be held for quite a while (this trade was held for 270 days).

The Entry

Now that we have our trigger and entry point requirements met, how do we enter and how much. I always enter my trades at the opening of the next candle after the entry point. I enter 3 trades at that time as I will scale them out as we go. It doesn't matter what sizes you use as long as you stay consistent with each set of trades. For these examples, I will use 1 standard lot size for uniformity, but you may use smaller lot sizes if you eventually try it out live or on demo. Now as you know, I love martingale concepts and I wanted to use that in some way and work it to our advantage. Instead of a true martingale, I used a moderate progressive multiplier for every additional entry point set within the swing we are currently in. It would go like this:

1, 1.25, 1.50, 1.75, 2, 2.5, 3, 3.5, 4, 5, 6, 7, 8, 9, 10, 12, 14, 16, 18, 20, 25, 30, 35, 40, and 50

Very rarely will you ever see anything above 8 or 9, but this is what I have set for my rules if it does get that far. Now if you want something milder, feel free to modify this as you see fit. I do this because as we have more valid entry points along the way, the higher lot sizes will incur more swap and also generally produce as much profit as the longer, smaller trades because of the increase. You'll see what I mean as we go along. In the example below, we have 2 sets of trades, one with 3 trades @ 1 lot each and one with 3 trades @ 1.25 lots each for a total of 6.75 lots.

The exit

Exits are a funny thing as some traders will exit trades in a totally different manner than another. Before we go over this though, I'm sure some of you have noticed that I have not mentioned anything regarding a stoploss, and you would be correct. I do not put a stop on these trades, why? Because of the fact that we can have multiple entries within a swing with this system, you have to treat these entries as a "basket" of trades. If we reach our exit criteria and we see that our first few sets of trades may become losing trades, we must understand that the swap that we have been accumulating over the whole period of that particular swing has now canceled out all of the losses, or a least a large potion of it, and the increased lot sizes of the following entry points will generally make up the difference of those losses in the long run. You can visually go back and see in the charts where this has occurred.

Alright, back to the exits! Normally, what I do to scale out the trades is to use the Laguerre and the Trend Power to help. What we are looking for is for both indicators to reach the opposite side to trigger an exit. Trend power is generally quicker to do this, but on rare occasions the Laguerre will hit first. These two indicators will help us with scaling out the 2 out of the three trades per set. In the first pic, the Trend power has breached the opposite side above .9 (red line). At this time, we will close out 1 trade from each entry point at the open of the next candle, as long as it is in profit. If any entry point is not in profit, we do not close any trades within that set. Here, both entry points are in profit so we close 1 trade using 1 lot and 1 trade using 1.25 lots, leaving 2 open trades in each set with a total of 4.50 lots still on the table.

The second exit point is when the Laguerre hits the opposite side (red line). Here we exit one trade from each entry point, as long as it's in profit, which leaves us with one trade left in each set. Now, if you do have a situation where you were at the first exit and you were not in profit and couldn't close a trade, now is the time to close those trades if you are now in profit.

The third and final exit is going to be discretionary and totally up to the trader as you can do it a couple of ways.

1. You can exit all remaining trades when either the Trend Power or the Laguerre reverse back down below the line, or

2. Exit all trades at the opposite SwingSpot Trigger arrow, which is what I do, because this is again an early signal for a reversal.

This is how it would end up using #2. I'll wrap things up for now and be back tomorrow for some different examples.

Thank you, for the system.

Which is the configuration of trend power, not this one in the templete.

Thank you

Sorry, I have two versions of Trend Power with different default settings. I added the proper Trend Power used in the template in post #1.

mer071898 thx for the nice system.

Question:

I have no sell swap indicator on any of my charts. I'm using the same one's as you are using.

Your charts show buy and sell swap's. I only show buy.

edit: I'm guessing it's because i'm on my laptop which isn't large enough to show the sell swap which is far off to the right side of the window.



thx,
todd

always loved your ideas
i have got the same problem as todd's. only buy swap and no sell swap..
regards

Same here.

Marshy

I edited the positioning of the Spread, Buy and Sell on the screen. See attached. Hope it fixed it for you.

thks for posting the strategy mer.


i'd like to ask:


1)We only trade in the direction of positive swap, for eg if a pair has positive swap of at least 1.5 on the buy side we only trade the buys and ignore the sell triggers in case the swap is negative on the sell side. Also some pairs have negative swap on both buy and sell sides because of small differential in interest rates and broker mark up .... so we can not trade these pairs at all on either buy or sell side. Is this correct?

2)Also in case we have reached our second exit ie the lagguire has reached the oppo end and none of our entries are yet in profit what should we do?

thx

Thanks for the fix. I'm using a 42" LCD monitor, so that might be the difference.

Yes, you do not want to be trapped in a lengthy trade with negative swap wiping out your profits. The whole idea of trading the positive swap is to help offset any losses that may occur during the total time we're involved in a swing.

You may trade any pairs you wish, it is just my preference to use pairs with 1.50 or higher positive swap rates. Even if the swap rate is only .01, that is better than using negative swap in my opinion.

Again, if you reach this point you can elect to close that part of the set for a loss and move on to let the remaining trades in the set finish or you can do the same as you would do at the first exit criteria and only close those trades that are in profit and allow those remaining non-profitable trades to run until you decide to close them at an opposite trigger or when either the trend power or laguerre reverses back across the line.

It's tough to find an example because it hardly happens at all. An example where this would've happened is on Nzd/Jpy. As we can see there are 4 sets of trades initiated on this swing. By following the guidelines we would've closed out 2 of the 3 trades from both sets 3 and 4 because they were in profit at the time the exit signal occurred. Sets 1 and 2 would have all 3 trades still in place because there were no profitable trades at the first 2 exit points. If you look at it as a "basket", the overall basket would be profitable due to the increased swap profits and trade profits from using the higher lot progressions you would place on sets 3 and 4. I hope that answers your questions.

I suppose that on a mini account the swap values would be 1/10 of what yours show?

thanks Mer....impressive !!

could someone please set the text of the third window? (spread-swap)

saludos.

The swap rate doesn't change, it is multiplied by the pip value per lot to get the actual swap amount. For example, on Eur/Usd the swap shows 1.87, which means you'd take 1.87 times the pip value per standard lot. Eur/Usd pip value is $10 per pip for a standard lot, so you would earn $1.87 per day for every full lot you would trade. If you trade .1 lots you'd earn $.187 per day.


2+2=4ex fixed the spread swap monitor in post #12 and I already added it in the first post.

Like I mentioned the other day, I wanted to show a few charts with different examples of where the trades are currently at and some charts showing the last swing that recently closed.

Eur/Chf

This is a good example of the drawdown potential that can occur during these swings. As you can see we would have opened 10 sets of trades at the 1, 1.25, 1.50, 1.75, 2, 2.5, 3, 3.5, 4, and 5 levels or 76.5 lots. The longest trade is roughly around 740 days old. Just so you know, I only trade .1 lots live so I only have 7.65 lots on the table for this pair.

Now, the first entry is at 1.56670 and the lowest entry was at 1.26199 in set 9. Hypothetically, let's say price retraces back to halfway between these points to 1.41434 which I've marked on the chart. We would end up having 8 out of 10 sets in minus numbers. Did we still profit from this? Let's say no trades were closed at the exit points and we had an opposite trigger at 1.41434. Let's do the numbers including the progression multiplier with each set:

Set 1 -1.56670-1.41434= -1523.6 x 1.00= -1523.6 pips
Set 2 -1.54710-1.41434= -1327.6 x 1.25= -1659.5 pips
Set 3 -1.53390-1.41434= -1195.6 x 1.50= -1793.4 pips
Set 4 -1.49860-1.41434= -842.6 x 1.75=-1474.55 pips
Set 5 -1.50240-1.41434= -880.6 x 2.00= -1761.2 pips
Set 6 -1.43210-1.41434= -177.6 x 2.50= -444.0 pips
Set 7 -1.43174-1.41434= -174.0 x 3.00= -522.0 pips
Set 8 -1.41901-1.41434= -46.7 x 3.50= -163.45 pips
Set 9 -1.26199-1.41434=+1523.5 x 4.00=+6094.0 pips
Set 10-1.26278-1.41434=+1515.6 x 5.00=+7578.0 pips
---------------------------------------------------------------
Total=+4330.3 pips

Now take this times 3 trades per set and you would end up with +12,990.9 pips

So as you can see, even with 8 out of 10 sets being unprofitable sets, we still ended up with almost 13,000 pips. Also keep in mind that this is only the total pips made and is not including any positive swap we earned during this time. At Eur/Chf's current pip value, that would be roughly $135,561.93. Not bad for a couple of years work on one pair looking at your charts once a day. Just think what could be possible with 12 or 13 different pairs?

Eur/Usd

Here we have 1 single set open with a 1st and 2nd exit being triggered and 2 of 3 trades closed out for profit. The last trade is still active unless you closed it out during the Laguerre or Trend Power's reversal.

Eur/Jpy

Now here we have a unique situation where we have 2 sets opened and our 2nd exit is triggered on the Laguerre but no exit is triggered from the Trend Power. Here you would treat it as a 2nd exit and close 2 of the 3 trades in each set (if profitable) and leave the remaining trades in each set run until your final exit criteria is met. Now as you can see, we also have three more entry points appear after our exit trigger. You can treat this two ways:

1. Enter your new sets as a continuance of the current progression using 1.5, 1.75, and 2 as your progression multiplier or:

2. Enter these set fresh from the beginning and treat it as a new swing altogether.