My Forex Prediction using Advanced GET - page 60
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Swing Trading ... contd
We will now turn to the Swing Trader. What is the make-up of a Swing Trader??
SWING TRADER:
From their definition, the main objectives of a Swing Trader are dual in nature – (1) to ENTER/EXIT AT/NEAR END OF A SWING. The method to do so gives rise to a number of strategies, so it is left to the trader to use whichever method he deems suitable for himself and (2) to hold his position for more than 1 day but not more than 7 days.
So these two conditions must be satisfied before we can apply the term “Swing Trader” in its actual meaning.
This is the same objective of most trading methods: To buy at the bottom and to sell at the top. So a Fibonacci trader can be classified as a swing trader since his aim is to buy at bottom and sell at top or vice versa though he uses ratios to help him and he must be prepared to hold for 2 to 7 days.
An Elliott Wave Trader can also be classed in this category as his objective is the same – buy at end of a wave and sell at top of a wave or vice versa and he too must be prepared to hold for 2-7 days..
And many other styles of trading with these same objectives can also be categorized as such.
So the term swing trade is very broad when it comes to trading methodology but the holding period applies to all – more than a day and maximum 7 days.
HOW MUCH CAN A SWING TRADER MAKE. Here again, I assume he is Mr Perfect Swing Trader, able to buy at the bottom and hold on for 2-7 days with the objective that during this time span the price will reach a high point, upon which he will close his trade.
We assume he identifies the trend correctly, time will allow him to let his “investment” grow until it reaches its optimal high within a maximum of 7 days.
For purposes of comparison, in his case we need to study the WEEKLY RANGE etc. for the past 5 years from 2005 to now.
The AVERAGE WEEKLY RANGE for GBPJPY is 528 pips compared with the Average Daily Range of 231 pips. (We are speaking of “average” figures. In individual cases, both the Weekly and the Daily Range can be much higher as much as 2441 for the Weekly and 1340 pips for the Daily).
The AVERAGE WEEKLY OPEN TO HIGH is 240 pips compared with 104 pips for the Daily.
The AVERAGE WEEKLY OPEN TO LOW is 288 pips compared with 127 pips for the Daily.
The Swing Trader takes 5 days (weekly) to make 528, 240 and 288 pips respectively in each scenario with one single order.
The Day Trader makes daily 231, 104 and 127 pips MULTIPLIED by 5 days will be 1155, 520 and 635 pips for 5 days with 5 orders ie one order per day.
Perhaps this is too simplistic an approach to measure their performance but it is the simplest mathematical approach. Various other combinations can be used but then it becomes “a little mind bogging” for me. So I leave it as it is.
No compounding is used for these calculations.
These are all based on assumptions and mathematically for the purpose of presenting both sides of trading and the REAL WORLD and the CONCEPTUAL WORLD are also worlds apart. And individually it is also difficult to say who makes more, though conceptually the Day Trader (who holds his trade and let the market run its full course for the day) seem to be better off. Will he be making every day in the real world?? Will he be able to accomplish for 4 weeks, every day hitting a winner. I am skeptical.
General: The conclusion by some writers is that Swing Trading works well for part-time traders for those doing it whilst at work WHEREAS day traders have to glue to their screens the whole day.
Notwithstanding what has been said and using assumptions conceptually, the debate will continue on. It is an endless and timeless subject ........
Final Part ... to continue within 1 hour
Kenneth,
Many thanks for taking so much time to explain this in great detail. Very useful. I have a feeling (cant prove it statistically yet) that most Swing traders are undercapitalised. Part time traders like myself come up normally with about couple of thousand pounds at the most. With ATR for the week being around 200 pips, 10 consecutive losses at standard lot will wipe the majority of this account. One way is to with .1 lot.
The second is that, the more time you give for a trade, the more vulnerable it is to other parameters, like news, government intervention etc. This can throw things out of balance. Whereas in day trade, if you are looking at a trading window of a few hours, then as long as you are clear of any news, then the trend is more predictable and less influenced by other factors. The time component of a trade is something that we normally dont seem to take into consideration.
If i could be glued to my computer anytime i want, i would scalp my way true London and New york session altogether, I would move in Switzerland, or Kuala Lumpur
where i could still have a normal life, sleeping at night. I would trade micro lot on a ecn broker on a tick chart. I feel i would compound more and faster then any other method. But not being able to bring my attention more then a couple hours a day, during the quiet directionless sydney session, choice have to be made toward swing trading. It's a mater of being available, and being willing to do this everyday! I knew some US trader that go to bed early by 20:00pm to wake up at 02:00 am to be ready to trade at 03:00am but i prefer swing trading then doing this!
I have been looking at these 3 pairs all week end, i came to conclusion that yes eur-usd uptrend is still intact on the weekly, and for the JPY pairs, aparently, asia don't want the US$ to loose anymore value, so for some time i think USDJPY should be range-bound. Euro, should go up, as for gbp, it is the weakest so it can be short but then the logical trade should be long EURGBP even if it seems already overbought..
Eurgbp
I have been looking at these 3 pairs all week end, i came to conclusion that yes eur-usd uptrend is still intact on the weekly, and for the JPY pairs, aparently, asia don't want the US$ to loose anymore value, so for some time i think USDJPY should be range-bound. Euro, should go up, as for gbp, it is the weakest so it can be short but then the logical trade should be long EURGBP even if it seems already overbought..
Thanks, GreatYves:
The EURGBP is indeed a GOOD BUY especially for Position Trading. Both the Daily and the Weekly EW charts are in Primary Wave [3]. It is one of the BEST COMBINATIONS in Elliott Wave Theory.
Furthermore, readers, these charts are very much ABOVE their 30, 50 and 100 period MA.
Attached is an EW chart from GET- Daily and Weekly for your reference.
Good Trading
Kenneth
On EURUSD, the first 5 alternatives state that it is in Extension 3. It is Wave 5 of a third fractal of Extension 3, which started around 16th Jun 2009. The Intermediate, Minor and minute are all showing up, with an immediate target of 1.4846. What GET shows as Extension 5 can actually turn out to be Extension 3.
Wish I can paste the chart in this reply. I have seen some people do that. Can anybody please tell me how to do that?