SwingRider - Simple, Low-Maintenance, Ef
In the process of searching and testing other published systems, I came up with the idea for this basic swing trading system. Based on the traditional MA crossover style concept and enhanced with some custom auxiliary indicators, I have found it to be very consistent across many timeframes and currency pairs. I haven't quite settled on the hard and fast rules for it yet, so I thought I'd start this thread to generate some feedback and get more trading minds involved in developing it further.
Trade entries are signaled by the SwingLine indicator - essentially my own HMA implementation, simplified and recoded for greater computational efficiency. The SwingValidator indicator will filter out false signals, and the early warning indicator will suggest exit points. Both auxiliary indicators derive from SwingLine and call it from its code.
Entry: Note that the first candle that opens above the SwingLine will go long, and the first candle that opens below the SwingLine will go short. Only trade if allowed by SwingValidator. If the first signal candle does not validate, wait for the next signal candle.
Filtering: The SwingValidator moves up from zero when a valid swing is forming, and moves down to zero when the swing loses strength. Therefore, you should only trade if:
a> The current SwingValidator level is higher than the previous level
or
b> The current SwingValidator level is the same as the previous level, and the previous level is higher. This is because SV usually bounces from zero when the swing changes direction, so you can get into the bar early by accepting two equal bars that appear as part of the bounce... BUT -->
If the SV is at or near zero in three or more bars, stay away! This shows a flat consolidation period and one should never trade through a volatile system like this. Instead, wait for SV to show a clear uptrend before entering the market.
Exit: Early warning indicators suggest points at which volatility appears to be waning and where one should consider taking profits. When EW turns in a diverging direction (diverging upward when short and downward when long), it is a warning sign, as is a zero cross in the opposite direction of the trade. The most conservative approach is to exit immediately at the first warning, but I prefer to move the stop loss somewhere behind the current market price to allow the volatility to continue. I continue to adjust my stop loss every time I get a new warning. In many cases, the third or fourth warning actually marks the end of the swing, so more profits can be made this way.
In the two example charts below, blue vertical lines show entries and red vertical lines show warning signs.
Please note that sometimes SwingLine Cross and SwingValidator will give entry signals, but the warning has diverged. This should indicate that there is additional risk in the trade, and more conservative traders may choose to pass on the risk. My preference is to set a larger stop loss (and reduce my trade size accordingly) and be prepared to ride out the first few hours until the volatility gains momentum. One could even make a second entry when the EW split ends, but that would be a pretty radical move... for everyone
Digital GC
Trade entries are signaled by the SwingLine indicator - essentially my own HMA implementation, simplified and recoded for greater computational efficiency. The SwingValidator indicator will filter out false signals, and the early warning indicator will suggest exit points. Both auxiliary indicators derive from SwingLine and call it from its code.
Entry: Note that the first candle that opens above the SwingLine will go long, and the first candle that opens below the SwingLine will go short. Only trade if allowed by SwingValidator. If the first signal candle does not validate, wait for the next signal candle.
Filtering: The SwingValidator moves up from zero when a valid swing is forming, and moves down to zero when the swing loses strength. Therefore, you should only trade if:
a> The current SwingValidator level is higher than the previous level
or
b> The current SwingValidator level is the same as the previous level, and the previous level is higher. This is because SV usually bounces from zero when the swing changes direction, so you can get into the bar early by accepting two equal bars that appear as part of the bounce... BUT -->
If the SV is at or near zero in three or more bars, stay away! This shows a flat consolidation period and one should never trade through a volatile system like this. Instead, wait for SV to show a clear uptrend before entering the market.
Exit: Early warning indicators suggest points at which volatility appears to be waning and where one should consider taking profits. When EW turns in a diverging direction (diverging upward when short and downward when long), it is a warning sign, as is a zero cross in the opposite direction of the trade. The most conservative approach is to exit immediately at the first warning, but I prefer to move the stop loss somewhere behind the current market price to allow the volatility to continue. I continue to adjust my stop loss every time I get a new warning. In many cases, the third or fourth warning actually marks the end of the swing, so more profits can be made this way.
In the two example charts below, blue vertical lines show entries and red vertical lines show warning signs.
Please note that sometimes SwingLine Cross and SwingValidator will give entry signals, but the warning has diverged. This should indicate that there is additional risk in the trade, and more conservative traders may choose to pass on the risk. My preference is to set a larger stop loss (and reduce my trade size accordingly) and be prepared to ride out the first few hours until the volatility gains momentum. One could even make a second entry when the EW split ends, but that would be a pretty radical move... for everyone
Digital GC
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