Australian (ASX) Stock Market Forum

Potential swing trades

Jump to new
bowman

bowman

Joined
29 June 2007
Posts
467
Reactions
0
The DOW rally last night was what I was looking for. Not sure how sustainable it is but it's got to be good for a few 5-10% swing trades at least.

I just have to narrow it down to the most likely opportunities, but I have a ton of possibilities:

ALZ ARU BMN EHL EWC GIR ICN JML MCR MRM MTN NOD PAN PEM PNA PSA TAP.

To name a few.

For what it's worth, I dug up this old swing chart set up which I haven't used for ages and only ever used loosely anyway. These days I mostly get by with the Stochastic.

The trrigger is:
1. 10 day SMA is above 20 day SMA, are above 50 day SMA

2. 3 day MA of the Force Index is below zero
13 day MA of the Force Index is above zero

3. D+ is greater than D-

4. ADX is above 25
 

Attachments

  • 19.05.09_ARU.png
    19.05.09_ARU.png
    20.6 KB · Views: 665
CMW is finding support on the 38% Fib retrace.
 

Attachments

  • SWING_CMW.png
    SWING_CMW.png
    22.3 KB · Views: 613
bowman said:
CMW is finding support on the 38% Fib retrace.
Click to expand...

According to my chart, CMW has exceeded 38.2% retracement of the uptrend from 18/2/09 to 6/4/09, and now looks like finding support at the 50% level.
However, the daily chart shows the stock to be technically in a downtrend......lower peaks and troughs, moving averages are flat to falling except for the 50 MA which is yet to react to the stock having changed direction.
DMI confirms the early stages of a downtrend....-DI is above +DI, ADX is at a low reading.
I'd be looking elsewhere for a stock that's strongly uptrending.
ARU is more the sort of trend that lends itself to profitable swing trades. And if there's one thing I've learned about trading, it's that you greatly stack the odds in your favour if you trade in stocks or markets that are strongly uptrending.

I note you're using ADX on a setting of 20 rather than the more common setting of 13 or 14. ADX is frequently slow to recognise a new trend even on a setting of 13. A setting of 20 makes it slower still. Have you thought of going for a lower setting?
I see ADX as being useful only if you can scan for it to help you find strongly trending stocks. An ADX scan is not possible in some software, although it is in mine. If you can't scan for ADX then I'd suggest you might as well just eyeball the chart to assess trend strength, rather than using ADX for this purpose.
 
Hi bunyip

The settings on that chart are from an old swing trading system I bought ages ago.

I never really followed the entry rules to the letter and as I said in my original post nowadays I mostly get by with the stochastic and a dash of gut feel.

I gave up totally mechanical trading quite a while ago.
:)
I do a bit of scanning now and then but mostly I keep extensive watchlists - I think you need to look at as many charts as possible, as often as possible.

Took a small position in CMW this morning at .58 and I'll see how she goes.

Cheers
 
Hmmm...you're probably right about the Fib retrace.

My charting program is behaving in a curious manner.

I have it installed on two puters and while I used the same points on both to get the fibs, I am getting different results.:confused:
 
bunyip said:
Bowman

Just wondering.....what was your setup or reason for buying CMW this morning?
Click to expand...

1. Reversal hammer candle yesterday.
2. The fib retrace support - which I'm now confused about as per explanation above.
3.Oversold stochastic
4. RSI turning up
5. Buy side was building - off screen seller evident today
 
Here's a swing trading system that's just about as simple as it gets.
Some software can find for this setup by scanning for two or three lower lows or lower closes.

If you wish to use an indicator to pick these trades, you'll find that a 3 period CCI falling below zero tends to correspond with the TKO signals. CCI scans are easy to set up in some software.
Click on the chart to enlarge it.
 

Attachments

  • TKO1.jpg
    TKO1.jpg
    124.7 KB · Views: 73
bowman said:
1. Reversal hammer candle yesterday.
2. The fib retrace support - which I'm now confused about as per explanation above.
3.Oversold stochastic
4. RSI turning up
5. Buy side was building - off screen seller evident today
Click to expand...

Thanks for the explanation, Bowman.
It's always interesting how different people see different setups in stocks.
My take on CMW would have been that the stock appears to be in a new downtrend, therefore I wouldn't entertain the idea of buying it.
I'd suspect that any upward move off the Fib level and the Hammer would likely prove to be just a brief counter-trend rally that quickly runs out of steam, then the stock would resume its downtrend.
 
Thanks bunyip, I like the look of that. I have a decent watchlist of trending stocks (although many of them swung up on tuesday) so I will have a good look tonight.

.
 
Hi Bunyip,

I'm long time lurker of these forums and always pretty impressed with your posts and comments on trading when going back through the archives. They've certainly given me quite a few ideas to pursue.

Anyway, just out of curiosity do you actively trade Landry's TKO setups noted in your last post? It looks a little similar to one I've read about from Carter's Mastering The Trade.

Looks such a simple setup but simple invariably works.

Thanks,

Steve
 
stevo58 said:
Hi Bunyip,

I'm long time lurker of these forums and always pretty impressed with your posts and comments on trading when going back through the archives. They've certainly given me quite a few ideas to pursue.

Anyway, just out of curiosity do you actively trade Landry's TKO setups noted in your last post? It looks a little similar to one I've read about from Carter's Mastering The Trade.

Looks such a simple setup but simple invariably works.

Thanks,

Steve
Click to expand...

Steve

The TKO is one of the setups I use on daily Forex charts. I've used it on stocks too but I stopped trading stocks a few years back after I discovered currency trading.
I only use the entry part the TKO system, not the exit part. I've found better ways to exit. Try a crossover of two moving averages as your exit signal.....5 EMA of the close, and 6 EMA of the open. I think you'll find this does a pretty fair job of keeping you in for the duration of the trend and taking you out when it's run its course.
Alternatively, instead of bailing out on the crossover you can move your trailing stop up close to the price action once the two EMA's cross. That way you're still in the trade if it runs further, or you're taken out with some profit if price heads south.
Like everything else it sometimes works wonderfully well and other times not so good.
Entries are pretty simple, exits are always the tricky part. Nobody seems to have found the perfect exit strategy and I doubt if anyone ever will.
 
Agreed nothing ever appears to be perfect when considering exits. I use a 6 bar count back as a trailing stop for my stock trades which works pretty good. But I still managed to get stopped out of WFMI at 15 whilst entering at 12. Stock is now 22+. Nevermind, I'll keep searching and testing various exit strategies, the 6 bar count back has still managed to captured a couple of 5R trades so happy to use that for the time being.

Thanks for highlighting the Landry setup.

Steve
 
Steve

I know of Guppy's countback line - it's one of the indicators in my software but I can't make much sense of it any time I've tried it on my charts.
Maybe I just need to research it properly.

The attached chart shows how the crossover of the 5 EMA of close and 6 EMA of open could have been used to squeeze a bit more profit out of your WFMI trade.
 

Attachments

  • TKO2.jpg
    TKO2.jpg
    113.3 KB · Views: 35
Hi Bunyip,

6 bar count back trailing stop differs a little from Guppy's in that it simply takes the low of the 6th bar (high or low) whereas Guppy takes the third lower low in his count back.

My apologies, I was at work and got my numbers a little wrong, just checked and I was in at 14 and out at 17. So could have squeezed a bit more out using your EMA crossover. Certainly food for though pardon the pun. Will run it back through my previous trades and see how I would have gone.

Just out of curiosity why did you make the transition from stocks to FX? Does FX offer more trending environments?

Thanks again,

Steve
 
stevo58 said:
Hi Bunyip,

6 bar count back trailing stop differs a little from Guppy's in that it simply takes the low of the 6th bar (high or low) whereas Guppy takes the third lower low in his count back.

My apologies, I was at work and got my numbers a little wrong, just checked and I was in at 14 and out at 17. So could have squeezed a bit more out using your EMA crossover. Certainly food for though pardon the pun. Will run it back through my previous trades and see how I would have gone.

Just out of curiosity why did you make the transition from stocks to FX? Does FX offer more trending environments?

Thanks again,

Steve
Click to expand...

Steve.....Do you mean the trailing stop goes under the low of the sixth last bar? I'm thinking that maybe I've misunderstood you?
I'll be interested to hear how the two exit system compare on your past trades.

Yeh, the better trending characteristics of FX are probably the main reason I made the transition.
You'll be aware of how choppy stocks were until the last few months when they started heading north. The FX trends were magnificent during those months of extreme volatility in the stockmarket.
FX is one of the best markets for technical traders because of the way it forms and responds to standard technical analysis patterns and setups.

The limitation of FX compared to stocks is that there are only a dozen or so FX pairs that are worth trading. I follow just eight pairs myself.
Still, over the course of a year there are many dozens of trade setups available from daily charts....more than enough to offer plenty of trades.
Intraday FX traders of course have many more trade setups.
 
Yes I mean the trailing stop gets placed under the low of the sixth bar back and so on.

Okay heres a comparison of the exits of 3 winners I've had

CCE - Entry 12.15

6 Bar Exit - 16.99
Bunyip Exit - 17.20

LEAP - Entry 31.89

6 Bar Exit - 36.7
Bunyip Exit - Would still be in trade at 39.84!

SNX - Entry 15.82

6 Bar Exit - 18.8
Bunyip Exit - 19.3

Looks like I could have squeezed a little more from my trades using your exit criteria!

I will have to look at FX at some point, currently spent a lot of time learning about position sizing, risk and the psychology of trading and well aware of the challenges ahead. I am minorly profitable in the stock markets at the moment and will continue to work at this. If I can get this working, will try and explore FX then. Being a Pom, I keep an eye on the GBPAUD pair from time to time which is currently drastically against us (England), looks like its about to pop one way or the other. But even so prices have been fluctuating in the 1.95 - 2.05 area, must have been some great swing trading opportunities there.

Thanks,

Steve
 
Steve, maybe as well as trying to improve your exits you need to look at having a re-entry method?

This is something I'm trying to develop atm, as on review of a lot of my trades I'm getting stopped out by a few cents only for the trade to then move in the right direction. The re-entry won't be under the same set up that triggered the original trade but more of a general entry based on the original pattern holding up.
 
Thats a very good point. I did try on a couple of trades but got burned so its an issue I need to face up too. If I had just jumped straight back on a couple of trades then would have reaped some good profit.

Thinking aloud, if theres a convenient spot to place the stop and the entry falls within risk criteria then there would be no reason not to re-enter. Just need to develop a mindset that its a new trade. I'm also trying to come up with a way to pyramid or scale into the winners. Was going to try it this week but the markets have since turned sharply against and knocked out these positions.

Will keep working.
 
Top