swingin' the ftse: 2009

[tomorton]

Yes, its very annoying when we know the market is going to go down but the market hasn't read this excellent thread so keeps going up. But that's life and this is what stops are for. But it surely must still be ultra-high risk to be going long at this altitude: I'd like to see a pull-back finding support at 4600 or better 4500 before getting out the long money.

 

[Splitlink]

Yes, its very annoying when we know the market is going to go down but the market hasn't read this excellent thread so keeps going up. But that's life and this is what stops are for. But it surely must still be ultra-high risk to be going long at this altitude: I'd like to see a pull-back finding support at 4600 or better 4500 before getting out the long money.

It certainly is ultra high risk to be long overnight, I agree. When the exchange is open the position may become clearer. Day bar readers can't see what could be a failed high that is appearing on smaller timeframes, but it is after hours charting and I treat it with reserve. Globex may hope to suck in short term readers with that sort of pattern and Monday might be a different story.

 

[tomorton]

warning: this is from a prorealtime chart which has had a lot of suspect data over the last few months although they say it has been corrected. I've not bothered checking it.

New weekly close high but still a bit to go to knock out the high reached in January. So far as three bar swingers are concerned the latest up move of nearly 500 points has come without any retracement and they will not have been in unless they play the swingtrend change as well as 3 bar retracements.

Thought you might be interested to see about a years worth of 3 bar swings.

7 buy signals

- 2 failed
- 2 break even (reached 1:1 so stoploss moved to b/e)
- 1 better than 2:1
- 2 good @ 600/700 points (you'd have been stopped out of one at b/e if you didn't have a re-entry strategy)

3 sell signals

- 2 b/e (reached 1:1 but you'd have been lucky to escape on one)
- 1 better than 2:1

So a pretty poor period overall. Would have done better if you'd also played the swingtrend changes but that depends or where you would have put your stoplosses. No wonder we've been focussing on intraday

good trading

jon

This review recently by Jon still on my mind. I am still convinced 3-day swing trades will be profitable long-term, as they typically have close stops from entry and recur at the start of solid trends. But the scarcity of signals and number of false swing days is annoying - I personally find I get out of swing moves too quickly (why was I not recently riding a long from 14/07?). Looking now at using breaches of 14EMA as a back-up signal - long (if not already) on second successive rising close after earlier close(s) below 14EMA: vice versa for shorts. As we never know which will be the next big move, I see ideally the missed opportunity risk from not being in a major move as bigger than the risk of being wrong in a short move that reverses

 

[tenbobtrader]

analysis on this thread is 100 % correct .............. wrong

anybody interested should go back to the ftse absolute lows

read thread in date order against, with a ftse wk / day tf bar chart or whatever
100 % correct ........... Top picking by most !

good calls by Jon who appears the only one to be even close to the right side

I would have thought swing traders would be much better off buying support (day tf) once your swing trend is up and vice versa, when confirmed by all or most world indices

what appears to be happening is the reverse = everyone fishing for tops at resistance and vice versa via divergence readings etc etc known to be inaccurate if a trend in play

visable wk day tf up imvho

month could be still in down trend / pullback mode

noticed the same for the last couple of years on this thread the minute the ftse marks up a bit

anyhows ..........just an observation

latter

Andy

 

[tomorton]

Hi Andy, what's problem? As above, I wish I had been long right through from 14/07, am in cash now, and looking to go long again on retracement, somewhere like support demonstrating at 4600-4500 would be fine. Obviously, being short right now would be wrong, as trend is up and rise late yesterday would have hit swing stop and cancelled the short early in the day when the previous low was breached. Not too shy to say my ambition for next week is to get long.

 

[tomorton]

But still happy to take quick shorter-term short as we drop away from last week's high, but in the end I believe Friday's high will be breached.

 

[tenbobtrader]

analysis on this thread is 100 % correct .............. wrong

anybody interested should go back to the ftse absolute lows

read thread in date order against, with a ftse wk / day tf bar chart or whatever
100 % correct ........... Top picking by most !

good calls by Jon who appears the only one to be even close to the right side

I would have thought swing traders would be much better off buying support (day tf) once your swing trend is up and vice versa, when confirmed by all or most world indices

what appears to be happening is the reverse = everyone fishing for tops at resistance and vice versa via divergence readings etc etc known to be inaccurate if a trend in play

visable wk day tf up imvho

month could be still in down trend / pullback mode

noticed the same for the last couple of years on this thread the minute the ftse marks up a bit

anyhows ..........just an observation

latter

Andy

Hi Andy, what's problem? As above, I wish I had been long right through from 14/07, am in cash now, and looking to go long again on retracement, somewhere like support demonstrating at 4600-4500 would be fine. Obviously, being short right now would be wrong, as trend is up and rise late yesterday would have hit swing stop and cancelled the short early in the day when the previous low was breached. Not too shy to say my ambition for next week is to get long.

not directed at anybody or any post

not problem, just an observation

aware many are very aware they are contra trend posting (including myself) just all together looks kind of funny in hindsight

always noticed post count goes up at extremes and many posts contra to obvious trend, a good indicator perhaps, will have to forward test it

Andy

 

[barjon]

This review recently by Jon still on my mind. I am still convinced 3-day swing trades will be profitable long-term, as they typically have close stops from entry and recur at the start of solid trends. But the scarcity of signals and number of false swing days is annoying - I personally find I get out of swing moves too quickly (why was I not recently riding a long from 14/07?). Looking now at using breaches of 14EMA as a back-up signal - long (if not already) on second successive rising close after earlier close(s) below 14EMA: vice versa for shorts. As we never know which will be the next big move, I see ideally the missed opportunity risk from not being in a major move as bigger than the risk of being wrong in a short move that reverses

Trouble is, Tom, we get seduced by the short term which yanks us in and out, in and out, in and out of solid trends when we would have been better behaving more in buy/sell and hold it mode.

When I started this particular swingin' thread I talked about the different approaches of Bold Billy, Sound Sam and Cautious Clarence - http://www.trade2win.com/boards/uk-indices/49208-swingin-ftse-2009-a.html#post613916 . You can equally think of those as a single approach where a "bold" entry is made, followed by a "sound" addition, followed by a "cautious" addition with a series of scaled exits when a danger sign occurs, then confirmed once and then again. A useful weapon so far as exits are concerned is a re-entry strategy when that danger sign(s) does not follow through - you probably lose a few points going out and back in, but you can think of it like an insurance premium.

good trading

jon

 

[Splitlink]

I think that the problem is

Posters like me should not be on this thread because, although I used to be a longterm trader, I am not now, at present anyway. This could detract longterm traders from doing what they wanted to do in the first place.

As Andy, rightly, says, as soon as the market trends, which is what all have been waiting for, there seems to be a general anxiety to get the most out of the seconday tops and bottoms that appear.

This means that, once having left the trade, there is a reluctance to get back in, just in case they are too late and could lose some of their hard earned profits.

Perhaps, it would be better to have a buy/ take profits and not take any short trades at all.

Jon will remember how I, last year, I kept insisting that the upswings were pullbacks in a downtrend and that they were to be shorted-

Now, the trend has reversed and I seem to have lost my way a bit, to the detriment of my trading procedure.

 

[tomorton]

Good thoughtful stuff this.
I'm not a long-term trader (I hold no shares today and have other no long-term financial products barring an occupational pension plan). I'm not a good day-trader and don't have time at work to become a better one.

What do I want a trading system to do for me?
1. Get me in to every swing move. I want to be in all of them to a) maximise exposure to moves b) ensure I am in near the start of the big moves, which at some early point must be counter-trend c) because I don't see workable entry signals that predict whether a move will be for 40 points over 2 days or 400 points over 2 weeks.
2. Keep me in the move, or get me in again if I get scared out by short-term volatility.
3. Print a close, rational and well-defined stop-loss point because the implications of 1 are that I will be exposed to many whipsaws and failing moves.

Jon's picture of scaled entries and re-entries looks a good fit for the above and is parallel to what I was mulling yesterday using a 14EMA signal as a back-up to ensure in (or back in) a swing move.

I think I and some very good TA people have sometimes got the cart a little before the horse - i.e. rationalise and build a signal from TA knowledge in a 'lab' environment, then back-test to see how well it fits in the field - the 'pure approach'? Another approach might be the 'applied' - look at the moves we wanted to be in and identify a signal at their start that would have got us in: same process for re-entries in the same move. Participation in the key moves will pay for a lot of abortive entries.

 

[timsk]

Thanks for sharing this Timsk.....and a good call on the rise today! .
Still think a sell under Wednesday's low would be in order? I'd be interested in hearing your take on things....

Hi Mr. G,
Apologies one and all - a bit of a typo' in my last post, I'm afraid. I actually meant to say to short upon the breach of today's low and not yesterday's low (i.e. Thursdays low - which is when I wrote the post). Perhaps it's just as well I got it wrong as this would have been triggered on Friday and, with a logical stop just above Thursday's high, been stopped out as well - all on the same day!

This turned out to be a really bad call, but Friday was an unusual day. The market was drifting lower right up until the NFP figures came out. These really set the cat amongst the pigeons. My assessment is that the markets rose both here and in the U.S. simply on the basis that 28,000 more peeps in U.S. managed to cling on to their jobs than the consensus expected. Friday's response to the NFP numbers was irrational and disproportionate and, consequently, a correction next week is highly probable. IMO, the institutions used the NFP numbers as a means of sucking in - and suckering in - bulls into the market in order to drive prices higher. When the institutional stops are triggered, there'll be a sharp reversal as they exit their longs and initiate shorts. The bulls that joined the party (too late) on Friday will be toast next week. Now, this is all theory and supposition and, quite probably, total bo88ox! I'm a fully signed up member to the school of thought that says the market is what it is and does what it does and those that try to double guess it's next move tend to end up in the poor house. (Trade what you see and not what you think etc.) That said, some people 'see' a market rising strongly and are looking for opportunities to get long. I 'see' an overcooked market that's risen on very shaky fundamentals and therefore I'd look to do the opposite - when there's evidence on the chart to confirm my suspicions. So, in answer to your question, based on the current chart, a sell order just below the clutch of lows from last week around 4,630 is still very much in order.
Tim.

 

[barjon]

Tim

mmm, do the institutions use stops? I think most, particularly the funds, are reliant on cash flow - if the public are giving them money to invest they are duty bound to buy whether or not they think it's a good idea. Similarly if the public are withdrawing funds they must sell like it or not.

At the moment the public seem to be throwing money at them.

good trading

jon

 

[tenbobtrader]

9. Up market and down market patterns are ALWAYS present, merely one is more dominant. In an up market, for example, it is very easy to take sell signal after sell signal, only to be stopped out time and again. Select trades with the trend.

10. A buy signal that fails is a sell signal. A sell signal that fails is a buy signal.

from Trading Tips by Joe Ross


don"t pro"s / institutions use 24/7 cover to manage open risk ?

later

Andy

 

[tenbobtrader]

something for top pickers

something I found on my travels for top pickers that might be of some interest

 

[tomorton]

Simple trend-following re-entry signal in case you need to re-enter a trend (or are still not in) -

For Longs, look for first 2 consecutive closes above 14EMA and go long on C2 if at least 6 of the following points apply -
C1>O1
C1>(H1-L1)/2
C2>O2
C2>C1
C2>H1
C2>(H2-L2)/2
H2>H1
L2>L1

Ignore the signal if only scores 5 or less from above. Use L1 as initial Stop but move to B/E asap. See for example 01/04/09. Use a shorter MA if you wish to risk more whipsaws. Might be worth ignoring an inside range day that occurs between D1 and D2.

Reverse symbols for Shorts, though scanning charts so far suggests Longs will be more reliable.

 

[tomorton]

Yesterday, passing a pleasant Sunday afternoon in the garden reading about our subject, a blue tit crapped on the cover of my Master Swing Trader by Alan Farley. Does this mean something?

 

[Mr. G]

For Longs, look for first 2 consecutive closes above 14EMA QUOTE]


Tom - out of interest, why 14 as opposed to say 15 (3 weeks trading), or 10 or any other....?

 

[tomorton]

Hi Mr.G - Fair question but the length of the MA has no significance at all. The shorter the MA, the more signals will be generated, while fewer for longer periods, so the 200EMA might only procude 1 or 2 signals in some years. More signals = more trades = more transaction costs, and possibly a poorer success rate, though I have only tested for 14EMA.

 

[tomorton]

PS Mr.G - most traders avoid using short MA periods that short-term might involve them in unseen harmonics - so would avoid periods divisible into whole weeks. But I have never seen this demonstrated so it could be just a superstition. At 20 days or above, risk of harmionics is less and round figures are more commonly used - 20, 40, 50, 200, 250 etc., though you still see odd MAs like 39 cropping up. Choice of MA period between 39 and 40 will make not a jot of difference to conclusions drawn from TA of the same chart.

 

[Splitlink]

Yesterday, passing a pleasant Sunday afternoon in the garden reading about our subject, a blue tit crapped on the cover of my Master Swing Trader by Alan Farley. Does this mean something?

It means that blue tits have no respect. It's, also, a sign of Luck.