Swing Trading using support/restistance Entry Points help

[trader2713]

I swing trade futures (typically ES, GC, BP, JY, TY, CL mostly, emphasis on GC and JY while trying to get better at ES) using a simple entry strategy. I use fundamentals along with tech analysis to help determine trend and favored long or short selection. I enter at the swing low/high at the support/resistance (direction depending on current trend and favored side of trade). I look for the market to be oversold if going long and overbought is going short. I do not wait on confirmation from reversal candles but enter at the price entry target and place stops past any highs or lows that penetrated selected support/resistance (if available, otherwise I use volatility based). The target is the prior high/Low or the next important support/resistance level. This method has been effective for me by creating high win percentage with small losers or basically very low risk/ high reward.

The problem....my trades as simple as they are do not trigger often. I also wait to trade any consolidation of the market until a high and low rotation has been confirmed, then I do the buy low, sell high thing regardless of prior trend. I make my living solely by day trading so I need to add a few more trades per month. Many times I see the swing high or low stop short of my entry points (especially in GC) leaving me alone in the cold to watch my planned trade work out without me on board. What types of entry strategies do you guys use to determine when the swing high or low has been set and is ready for entry to resume the trend?? Any help is greatly appreciated! Thank you!

 

[lovethetrade]

That logic will never work, it's stage 1 in a 1000 stage process. Support and resistance as a method for entry/exit is a fallacy (IMO).

A lot of traders will tell you they don't try to pick tops or bottoms. Therein lies your answer.

 

[Fonz]

I day and swing trade as well.
Regarding swing trading, before the US markets open, I place between 10 and 20 orders (for stocks), depending on the current condition. Everything not filled is canceled as soon as I reach 10 positions. At best 3 to 4 orders a day are triggered. At worst, I don't have any triggered order for 3 days.
I use volatility and mean reversion.
I used to have the same problem than you regarding the number of trades. My list of "tradable" stocks is just larger than before. Could you just apply your strategy for a larger basket of futures ?

..A lot of traders will not tell you, they don't make any money in the market..

 

[tommcginnis]

This method has been effective for me by creating high win percentage with small losers or basically very low risk/ high reward.

The problem....my trades as simple as they are do not trigger often.

Do NOT screw with what works.
ADD to your tools in ways that are unrelated/uncorrelated -- this will keep your portfolio risk the same OR LESS.

(For example, if you're pushing a successful reversion-to-mean method that works market excursions, work the middle of the market instead -- sell (two-sided) option spreads. When the market is hanging in doldrums, your iron condors can pay some bills.)

FWIW and all that.

 

[murray t turtle]

That logic will never work, it's stage 1 in a 1000 stage process. (IMO).

A lot of traders will tell you they don't try to pick tops or bottoms. Therein lies your answer.

Great quote i agree with that quote; another big problem, best + brightest are in CL, ES.
Compare that with a cash market, like SPY,QQQ; leverage changes everything. 100% of foreclosure are caused by leverage.
also .
Also Trader 2713 , its usual, people do much better @ swing/position trading/investing or daytrading. wonder which one you do best , do you know- concentrate on that one?? [I stopped trading ES; great liquidity but sloppy trends as far as i measure it; great liquidity+ benchmark LOL. I still use SPY +ES as a benchmark]

Bottoms /tops are an area; not really one candle,bar except in 20/20 hindsight.More years may help solve part of your problem..................................................................

 

[trader2713]

I day and swing trade as well.
Regarding swing trading, before the US markets open, I place between 10 and 20 orders (for stocks), depending on the current condition. Everything not filled is canceled as soon as I reach 10 positions. At best 3 to 4 orders a day are triggered. At worst, I don't have any triggered order for 3 days.
I use volatility and mean reversion.
I used to have the same problem than you regarding the number of trades. My list of "tradable" stocks is just larger than before. Could you just apply your strategy for a larger basket of futures ?

..A lot of traders will not tell you, they don't make any money in the market..

Right, I agree, I actually started to do that by adding more futures markets. I just began doing this so time will tell.

 

[trader2713]

Great quote i agree with that quote; another big problem, best + brightest are in CL, ES.
Compare that with a cash market, like SPY,QQQ; leverage changes everything. 100% of foreclosure are caused by leverage.
also .
Also Trader 2713 , its usual, people do much better @ swing/position trading/investing or daytrading. wonder which one you do best , do you know- concentrate on that one?? [I stopped trading ES; great liquidity but sloppy trends as far as i measure it; great liquidity+ benchmark LOL. I still use SPY +ES as a benchmark]

Bottoms /tops are an area; not really one candle,bar except in 20/20 hindsight.More years may help solve part of your problem..................................................................

I have done better a trading the swings for 1 to 3 days. When I intraday traded the trends on shorter time frames I struggled immensely. I agree with you on the ES, charts can get sloppy. Trends will run away, and most breakouts tend to become traps at important market highs.

I take a little different approach for ES. I only take long positions and look for important lows, important market support areas for buys and take the rally back up. (Yes, it's trying to pick the bottoms, but it does seem to be predictable for the ES). It does have certain overall market prices it tends to show us that it uses to pivot back up. Bearish trends always seem to make great set-ups for market reversals to go long- at least for the past year or two it has due to the bullish market. The ES seems to put in and re-test certain lows or the general areas often. I do not consider a short position unless it has been at a market high that it seems to struggle at, then I may take a risk to trade it back down. I also take into consideration the move off of the price buy-in target in the past, how violent the buyers protect the position at the price level. But thats just me...and I have certainly had a love/hate relationship with ES and struggled with it.

 

[comagnum]

I will take trades at major S/R based on the volume in relation to the previous volume of prior swings from that level. The largest price moves off S/R often have at least one or two rinse cycles to shake out the weak hands before price makes a large move. Wyckoff, in the 30's, wrote about the relation to volume at major S/R to determine the probability of price breaking through or reversing and taking out the prior swing high for longs or swing low for shorts. It works very well to the day. With futures you need to use the underlying spot instrument to study the volume. Having real good $/trade mgmt is the most important aspect of making these type of trades profitable over the long run.

I believe the very best money is made at the market turns. Paul Tudor Jones

 

[murray t turtle]

I have done better a trading the swings for 1 to 3 days. When I intraday traded the trends on shorter time frames I struggled immensely. I agree with you on the ES, charts can get sloppy. Trends will run away, and most breakouts tend to become traps at important market highs.

I take a little different approach for ES. I only take long positions and look for important lows, important market support areas for buys and take the rally back up. (Yes, it's trying to pick the bottoms, but it does seem to be predictable for the ES). It does have certain overall market prices it tends to show us that it uses to pivot back up. Bearish trends always seem to make great set-ups for market reversals to go long- at least for the past year or two it has due to the bullish market. The ES seems to put in and re-test certain lows or the general areas often. I do not consider a short position unless it has been at a market high that it seems to struggle at, then I may take a risk to trade it back down. I also take into consideration the move off of the price buy-in target in the past, how violent the buyers protect the position at the price level. But thats just me...and I have certainly had a love/hate relationship with ES and struggled with it.

%%
Good points TraderTrender 27; by the way its late in the cycle but,
barchart.com has an overall buy on ES of 88%, 100% long term ES buy. i dont agree with them all the time but i like to look anyway.ES /SPY is a great benchmark

The turtles made millions with low% hit [win rate] + big trends so i look @ other stuff also , sounds like you do 2.LOL By the way Comagnum ;PTJ warned not much liquidity..... @ the bottom. ES has liquidity , but NOT much time @ bottom, thanks.LOL

 

[trader2713]

I will take trades at major S/R based on the volume in relation to the previous volume of prior swings from that level. The largest price moves off S/R often have at least one or two rinse cycles to shake out the weak hands before price makes a large move. Wyckoff, in the 30's, wrote about the relation to volume at major S/R to determine the probability of price breaking through or reversing and taking out the prior swing high for longs or swing low for shorts. It works very well to the day. With futures you need to use the underlying spot instrument to study the volume. Having real good $/trade mgmt is the most important aspect of making these type of trades profitable over the long run.

I believe the very best money is made at the market turns. Paul Tudor Jones

Nice advice thank you. I will look more into volume. Do you ever have the problem of price retracing to a S/R level but stopping short before reaching your entry and then turning back around and leaving you? Basically, it comes close but not close enough to afford the stop still on the other side of S/R, at least too much where risk and reward become skewed making the trade too risky if you are wrong. DO you change tactics in those situations or is there something you pay attention to that alerts to a possible reversal before it hits S/R? And what are your favorite time frames to draw S/R from? I use the 240m with the 60 to pinpoint the entry more accurately. I check the daily chart to compare my pricing strategy and how it stacks up to the overall market condition and my trade choice.

A missed trade example for me would be Gold futures recent activity. Last week we entered a familiar tier of trading between 1263 and 1243 (price stalled here in March) and we are here again now. I placed limit buy orders at 1244.5 after we hit the 1263 resistance. Price stopped at 1245.7 and turned back around back to 1263 (beautiful swing back high). So I missed the trade. This happens and catching these is what makes the difference for me from taking my trading to another very profitable level. I do catch these trades but plenty stop short from my entry causing me to miss them. I know S/R is a zone so I always place my entry above it (or below it) but there is always a push pull on how far to place it off the zone where too far and the stops get fairly large.