SH's swing trading system - a simple way to play the markets

[Shantala]

Looking forward

 

[NTrader42]

Hello SH

Great Post

You are not only giving us a new system to trade 30 Mins time frame but also a new way to look at price action. Just a breach of the MA line or minor slope changes does not necessarily change the trend. Using the trend definition from Dow theory and the EMA as a tool to identify the trend reversal points is a masterstroke that can be used on all the time frames.

Looking forward to further learning from the other details of the system that you will be posting.

Thanks
NT

 

[vinst]

Hi SH,

thanks for another, simple to follow and certainly effective method.
Something similar based on 34 ema is discussed here:

http://www.icharts.in/forum/swing-trading-the-speculator-way-t2230,postorder,desc,start,1170.html

please see the first post of the above URL.

SH,
I expect your method to have smaller SL since it is based on 15ema.

regards,
vin

 

[ptk]

ok then ... here we go then....

This strategy is highly inspired by Dow theory and Elder's greaters fools zone. The Dow theory defines a a trend as a sequence of higher highs and higher lows (bullish trend) and lower highs and lower lows (bearish trend). Elder's greater fool zone has already been covered by me in one of the previous threads. It explains how markets tend to revert to mean (ie correct back to a particular EMA) after it reaches a point far away from the EMA. Basically when markets are trending, they tend to trend till they hit extremes, then correct back to value zone ..and then start the trend again.

Our jobs as swing traders are to:

1. Identify the trend as well as trend reversals early.
2. Identify when the markets have trended to extreme zones
3. Wait for enough pullbacks before we enter the trend again.

We will cover all the above 3 gradually as we evolve this thread.

First things first, what all do we need on charts as indicators. We need to plot:

1. 15 EMA on 30 mins nifty futures charts
2. SMA envelope (17 SMA, 1.5 % deviation)

Now coming back to the 3 things we need to do as swing trader using 15 EMA and envelope as stated above:

- How to identify trend and trend reversal

As stated above, a trend is a sequence of higher highs and higher lows (or lower highs and lower lows). For the sake of this strategy, in a bull market, a lower high will be defined as a correction to 15 EMA after making a new high. If the correction does not reach 15 EMA, we will not consider any low made during that correction as lower high... our lower high will stay at the point where 15 EMA was last touched. A higher high is obviously a high made above previous high.

Similarly, in a bear market, any correction going upto 15 EMA and then falling to new lows would mean a lower high made..any other rallies that cease before 15 EMA is touched will not be considered at lower high.

If we see markets making highs, then pullbacks to 15 EMA, then making new highs, then again correcting to 15 EMA and then making new highs again .. we are in bull run. Each successive 15 EMA retest makes a higher low, We will call the higher low as 'bull SAR'

Similarly highs made around 15 EMA in bear trend will be called 'Bear SAR'

Trend reversal is whenever a bull SAR or bear SAR is taken out, we reverse to opposite position.

I will post some charts to explain bull SAR and Bear SAR in detail before talking about entries, SL and targets for this strategy.

Till that time, digest above

Cheers
SH

Dear SH,

I think there is a small correction in your writeup and on the chart also, please correct me and forgive me if I am wrong. I have made the changes below:-

QUOTE

As stated above, a trend is a sequence of higher highs and higher lows (or lower highs and lower lows). For the sake of this strategy, in a bull market, a higher low will be defined as a correction to 15 EMA after making a new high. If the correction does not reach 15 EMA, we will not consider any low made during that correction as higher low... our higher low will stay at the point where 15 EMA was last touched. A higher high is obviously a high made above previous high.

UNQUOTE

Similarly on the chart, it should be "Bull HL" instead of "Bull LH"

Many thanks for sharing the strategy and I am looking forward to trade this setup.

Regards,
ptk

 

[rkgoyal_98]

can some one post AFL code for envelop
Regards

 

[lvgandhi]

can some one post AFL code for envelop
Regards

see percent bands in bands in ami. That is standard afl from amibroker and adjust it to 17 and 1.5 where default is 15 and 2.

 

[Tradewithhunter]

Dear SH,

I think there is a small correction in your writeup and on the chart also, please correct me and forgive me if I am wrong. I have made the changes below:-

QUOTE

As stated above, a trend is a sequence of higher highs and higher lows (or lower highs and lower lows). For the sake of this strategy, in a bull market, a higher low will be defined as a correction to 15 EMA after making a new high. If the correction does not reach 15 EMA, we will not consider any low made during that correction as higher low... our higher low will stay at the point where 15 EMA was last touched. A higher high is obviously a high made above previous high.

UNQUOTE

Similarly on the chart, it should be "Bull HL" instead of "Bull LH"

Many thanks for sharing the strategy and I am looking forward to trade this setup.

Regards,
ptk

Yes thanks for pointing that out....was writing up the post late at night after a hard day at work and a few drinks down... :lol:

Cheers
SH

 

[Tradewithhunter]

Currently Nifty has made a new high so bull SAR has indeed moved to 5333

short will trigger below 5333

I will post more about profit booking zones and re-entry/pyramiding zone.

Cheers
SH

 

[lvgandhi]

Currently Nifty has made a new high so bull SAR has indeed moved to 5333

short will trigger below 5333

I will post more about profit booking zones and re-entry/pyramiding zone.

Cheers
SH

do you consider making a high or closing at high.

 

[mangup]

SSSShhhhh.... ...
It seems SH sir is using 315 on 30 min as well, as a "Intraday Swing Trading Strategy" . :!
__________________
Thanks n Regards

mangup

Hi Friends,

I will be posting my swing trading system here. As all of my other systems, this is again based on trend trading and I will use only EMAs to trade, this allows to keep this system simple and easy to follow.

I will use it on Nifty futures only here however this system only and the timeframe I will be using is 30 mins.

The next couple of posts are blocked from future amendments or links.

Do leave your comments as I would like to know how many people are looking forward to trade my swing system (I dont want to put a lot of effort in case there are not many takers).

Cheers
SH

Thanks SH, I was sure that we all will get a shower of one more strategy from you soon and the day has finally came. :clap::thanx: