swing trading system by tradehunter

6th February, 2012

http://www.traderji.com/technical-analysis/66593-shs-swing-trading-system-simple-way-play-markets.html#post642060

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

6th February, 2012

http://www.traderji.com/technical-analysis/66593-shs-swing-trading-system-simple-way-play-markets-3.html#post642460

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

7th February, 2012


Nifty futures charts for last 20 days (15 EMA and 30 mins)

all red dots are proper corrections to 15 EMA after making a new high (sometimes markets correct to go below

15 EMA, thats ok). As you can see, each red dot has made a higher low so each red dot makes a bull SAR.

A breach of bull SAR (i.e markets dropping even by 1 point below bull SAR) triggers trend reversal and shorts are

triggered.

Currently the bull SAR is at 5232 (lowest point between previous high and current high) . Today nifty touched

5398 before falling to 15 EMA and making 5333 low.

If nifty was to make a new high above 5398 tomorrow, it would mean todays 5333 would become a new bull

SAR.

If Nifty keeps falling and goes below 5232, it will mark the trend reversal and shorts will be triggered.

Please understand the above charts.


Tomorrow I will post about when to enter, book profits and pyramiding etc.

Cheers SH

7th February, 2012


Quote:

Originally Posted by ptk

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...

Cheers

SH

7th February, 2012


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



http://www.traderji.com/technical-analysis/66593-shs-swing-trading-system-simple-way-play-markets-4.html

7th February, 2012


Quote:

Originally Posted by lvgandhi

do you consider making a high or closing at high.

Just making a new high is enough ...close doesnt matter.

Cheers SH

8th February, 2012


Quote:

Originally Posted by mysticalrun

hello sh,

thank you for new masterpiece.lots lots of thank sir,

now as according to it ,nifty today breached bull hl,so now its in sell mode in 30 mins , am i right? i am saying

about nifty spot.

Mystical - at the start of the thread I said this thread if for nifty futures

Nifty futures longs still intact bull HL 5332

Cheers SH





8th February, 2012


Quote:

Originally Posted by mangup

Dear SH,

I have few queries. Kindly do reply.

1. What is the logic of deciding 30 min candle, since 15 min may be better as per me (keeping in mind that all

the candle are of full 15 min). In 30 min we have one candle which is not having full 30 min data. Will it not

distort the indicators/EMA/Envelopes?

2. In this strgty u suggested to use 15 EMA & 17 SMA envelope. Will this EMA-SMA combo will be in sinc or it has

to be EMA-EMA combo?

3.From the chart i observed that somewhere we have gone below 15 EMA thereby hitting Bull SAR suggesting to

reverse the trend. But the Bull SAR mark is lowered can u pl clarify whether some filters are used to mark the

Bull SAR or it is to be more visual?

1. doesnt matter that much ...I have chosen 30 mins becuase thats what suits me .... if you are comfortable with

15 mins you can apply the same strategy in 15 mins. For that matter intraday players can apply this on 5 mins

too. The only thing to keep in mind while shifting to a lower timeframe is that stoplosses will be small but

whipsaws can be higher.

2. I just have access to SMA envelopes so i use SMA. Never tried with EMA envelopes so cant comment.

3. please tell me the date when you see bull SAR getting hit.... please understand just going below 15 EMA

doesnt mean bull SAR is hit ... bull SAR is the lowest point made after testing 15 EMA .....

Cheers SH

8th February, 2012


Quote:

Originally Posted by VJAY

Dear SH,

Awaiting your entry/exit/adds rules?...are you using any filter for reversing trade?

entries i have already posted (break of bull HL or bear LH) .. in current case bull HL is 5332 so a brak of it means

square of longs and open shorts.

Exit and add rules later today.

Cheers SH



http://www.traderji.com/technical-analysis/66593-shs-swing-trading-system-simple-way-play-markets-post642712.html


8th February, 2012


Quote:

Originally Posted by vinst

5340 (yesterday's low)

Fantastic Vinst...spot on with 5340

Candle close doesnt matter as i posted previously.

Bharti airtel gave a whipsaw...part of the game!

Cheers

SH

9th February, 2012


ignore freak lows .... just look at normal lows and highs.

Unfortunately have been keeping very busy so havent been able to post additional rules yet. Hopefully over the

weekend will do it.

Cheers SH

9th February, 2012


Quote:

Originally Posted by amol_gh123

Todays new HL 5343.90

..Amol

New high made so bull HL shifted to 5343 ...

Please note how the mkts have closed at 5440+ with bull HL at 5343 (100+ point difference).

So if mkts were to reverse tomorrow and hit 5342 to trigger our shorts we would have lost 100+ points from the

peak.

this is where exit zones (greater fool's zone) based on 30 mins charts comes in handy. (already covered in a

separate thread). And this is the profit booking strategy here under this thread (you can also use 3 EMA

reversal sometimes to book on gap ups etc)

I will post about how to re-enter and how to pyramid over the weekend.

Till then enjoy your best friend ..the trend !!!

Cheers

SH






9th February, 2012


Dear SH,

I am posting the chart of Gold for learning purpose.

Sorry for the poor markings as my comp knowledge is limited.

Pl discuss,how u would have traded this chart.

Initially Long SLR was triggered & Then Short SLR was also triggered without much profit & then again Long was

stopped.

Have i understood yr method correctly.

10th February, 2012

Quote:

Originally Posted by rangarajan

Dear Vinst,

After the firstSAR for long, the stock pulled back to 15ema & again traded below the previous LL.

Hence the logical s/l for short should be 1747 & not 1752.

If it is correct,this s/l was taken & trade reversed to Long once again.

I had marked it with an up arrow.

For Long,the SAR to be 1724.

Stock went upto 1751 w/o triggering 1724.

My query is whether it is correct & if so whether the TWO failiures were part of the trading?If so,how to protect.

Pl discuss.

While gold broke the low then retraced to 15 EMA and then broke the lows again .. clearly all those candles are

sideways moves and not trending moves....



So gold SAR stays at 1752....

however since now the range has been broken and gold has made fresh lows..you can shift the SAR down to

previous lower high.

Cheers SH

10th February, 2012


Quote:

Originally Posted by mangup

Dear SH,

I think what i undestood from the rule if Bull SAR is nothing but the retest of prices when it touches 15 EMA &

making it is higher high in bull trend. This makes our Bull SAR.

For eg.1 on 6th (12:30 pm candle) low touches 15 ema so low=5346.50 is our bull sar. Then 6th (3 pm) it

breaches this prev bull sar. Should we have to reverse here.?

one more eg.2 on 7th (2pm) low hitted 15 ema so low=5373 is our bull sar. next subsequent 3 candles closes

below our bull sar. Should we assume our bull sar is hitted here.?

One more eg.3. on 10th (12 pm) low hitted 15 ema. next candle closed below low should we assume this hitted

our bull sar.

Kindly clarify my understanding.

Hi Mangup,

Just hitting 15 EMA does not mean it is a SAR... SAR is lowest point with 15EMA touch between two higher

highs... refer attached image...unless previous higher high is not broken by another higher high, u can not call

candle touching 15 EMA as SAR.. i hope this clears ur concept of SAR...

..Amol



11th February, 2012


Quote:

Originally Posted by rajesh pawar

Traderboy...

On 3rd when the bull SAR is breached and you have entered short then that same point does not become your

bear SAR. Bear SAR is the high formed between two Bull SAR. In this case bear SAR is the high formed at

opening bar of 2nd.

absolutely right rajesh, when bull sar is hit the previous peak becomes bear sar (843ish in this case). However its

not necessary to be the highest point between two bull sars ..its just the previous high made by pulling up to 15

EMA.

To explain my point, please look at the right hand side of the charts posted for RIL, if RIL falls and breaks bull sar

at 839ish .... the bear SAR will be 10th Feb high and not 8th Feb high....however if the difference between 8th

Feb high and 10th feb high is very small ..it becomes kind of double top hence its sensible to keep 8th Feb high

as safer bear SAR

Cheers SH

12th February, 2012


]

horizontal white lines show the new high made so take previous low can be made our bull sar.

Trader_boy




http://imageshack.us/photo/my-images/339/hdil.png/

12th February, 2012

http://www.traderji.com/technical-analysis/66593-shs-swing-trading-system-simple-way-play-

markets-12.html#post645103

Dear all - adding the Exit, re-entries rules.

Pyramiding later.

Exit rules when trade running in profit

We have to follow the greater fool zone strategy here. Please see this post to understand it more.

http://www.traderji.com/technical-an...tml#post612691

We book profits when greater fool's zone is hit or hedge by buying some options that can be exited when nifty

corrects to touch 15 EMA. I personally do not exit when the GFZ is hit first time(this happens after first

breakout), however start exiting from second time.

Profits should also be booked in case 3 EMA has not touched the daily candle in two consecutive days (3EMA

reversal rule)

Re-entries

Once profits have been booked due to GFZ (greater fools zone) hit, re-entries should be done once 15 EMA has

been retested. However to ensure that we do not get trapped into a correction that started from GFZ but is going

to hit the SAR, we have to ensure that the markets show signs of taking support at 15 EMA and then only we re-

enter.

So we need to look for strength being shown near 15 EMA to re-enter. I follow a simple rule here, once 15 EMA is

touched by a 30 minute candle, I wait for the first green candle to close above 15 EMA after the candle that

retested 15 EMA. the candle which retested 15 EMA is irrelevant, we need to wait for the next green candle and

then we re-enter. The SAR stays as per the system and moves up only after a new high is taken out.

Please see below chart to understand re-entry.



http://www.traderji.com/technical-analysis/63589-shs-trading-greater-fool-zone-2.html#post612691

Please review the method properly and the trade. Like any other method this one is no holy grail, it will have its

whipsaws every now and then and the key will remain to be consistent, patient and disciplined.

Since 1st Jan we have been in an extremely rare uptrend so any trend following method (including this one)

would look magical ... please dont get overexcited over this method ...trade safe with sound money management

rules and dont overleverage ....

Happy trading and Cheers !

SH

13th February, 2012



Quote:

Originally Posted by Tradewithhunter

absolutely right rajesh, when bull sar is hit the previous peak becomes bear sar (843ish in this case). However its

not necessary to be the highest point between two bull sars ..its just the previous high made by pulling up to 15

EMA.

To explain my point, please look at the right hand side of the charts posted for RIL, if RIL falls and breaks bull sar

at 839ish .... the bear SAR will be 10th Feb high and not 8th Feb high....however if the difference between 8th

Feb high and 10th feb high is very small ..it becomes kind of double top hence its sensible to keep 8th Feb high

as safer bear SAR

Cheers

SH

Hi all,

I would like to amend the above.... the SAR will have to be the highest/lowest point and not just the last 15 EMA

touch ....

Rajesh arora is absolutely right.

Cheers

SH

13th February, 2012



Quote:

Originally Posted by techtrader2

SH based on your experience how many points can we make in Nifty per month using this strategy? Also how

many trades in a month and what is the winning % of trades?

Thanks

Techtrader - this depends on what phase the market is going through.... during times of good trends, one single

trade can give 200-300 or more points....

I personally trade all my strategies together (swing, 315, market correction prediction) so my personal results

may differ.

However if one was to trade this strategy from March last year till now, the person should be sitting on around

3000+ points profit per lot.

Cheers

SH







13th February, 2012



Quote:


Ohh sorry attached wrong quote...

I would like to amend the above.... the SAR will have to be the highest/lowest point and not just the

last 15 EMA touch ....

Rajesh arora is absolutely right.

Want to clear this ...

Ok let me explain....

Lets see current trade ... Nifty longs with Bull SAR at 5342 ... nifty recent top is 5450.95 ......

Lets assume nifty makes a new high now above 5450.95... the bulls SAR will move to the lowest point between

5450.95 and the new peak i.e 5350

OR

Lets assume nifty crashes now and takes out Bull SAR 5342 ...shorts will trigger our bear SAR will be the highest

peak made i.e 5450.95

Cheers

SH




14th February, 2012



Quote:


Hi SH,

As per your sheet, on 7-Mar-11, there was a short from 5480.. agreed .... but as per chart attached SAR would

have been 5552 ... but u have considered 5421 as SAR.. even though new low was not formed... can u plz

explain for better understanding.... is it like, if new low is formed consider latest 15 EMA touch and forget the

highest point between two lows....

..Amol

my charts showed new lows at previous days new lows and the next gap up to 15 EMA before making fresh lows

...so SAR 5421

If that is not the case, SAR will stay at 5552.

Cheers

SH




14th February, 2012


Quote:


Vjay - gap up above our SAR so we exit shorts immediately ... but opens in GFZ, so we wait and enter longs at

15 EMA touch.

Cheers

SH



14th February, 2012


Quote:


Dear SH,

how you traded this chart?...25th we are long ..SAR @ whiteline...here on how you would trade....no new high

after that...if we exited @GFZ then clear cut reentry @11.30 of 31st...here are we wait for hit our SAR?

Yes unfortunately.

What I do usually is after massive rallies and gap ups (SAR moves far away) I book profits in futures and take

positions in options, that locks in some profits and reduces heartburns if SAR is hit.

you would also see these 2 days were when 3 EMA was not touching for 2 consecutive days so another strong

reason for booking profits and waiting for 3 EMA to get hit.

Cheers

SH



14th February, 2012



Quote:


This is extreme trend and yes after we book profits it will be the case of missed opportunity since it keeps falling

without coming to 15 EMA ... but this doesnt happen often so worth sticking to the rules in long run.

Cheers

SH




14th February, 2012



Quote:


Thanks such for ur kind support...

SH as per ur sheet short initiated on 11-Jul-2011 @ 5615.. perfect

but for me as per chart, SAR 5515 got hit on 29-Jul-11.. and the trade turns into Long closing short... this going

Long trade gave whipsaw and gave 51 point loss...why u didnt u close that position on 29-Jul ???

In ur case u close this position on 29-Aug @ 4888... even for me that is not SAR.. it would be 4970.55 (chart

2)... totally confused now

..Amol

chart 1:

Chart 2:

Sorry my office firewalls block the charts posted but I just looked back on my charts...

5615 shorts on 11th July with SAR 5735 .... Nifty made a low at 5503 next day but 15 EMA not touched

anywhere so SAR stays at 5735

Nifty stayed in this range (5735 to 5503) and finally gave a new low on 28/7 hence bringing down the SAR to

5711 (25th July high)

you are right that trade was closed at 5515, longs initiated and then reversed to shorts with 60 point loss. From

5450 shorts again and nifty fell to 4721 non stop...

Pardon me I missed that trade .... I just created that sheet in a hurry yesterday manually ....

When you trade live with me ... you will understand the results better.

Cheers

SH




14th February, 2012



Quote:

Originally Posted by KID_of_MARKET

High is taken hence stop shifted to 5350

Yes, what is frustrating about last 3-4 days is that we have hit new highs 3-4 times but the bull sar has only

moved 20 points up ....this is becuase each recent low has been higher than previous low but very close to it ....

Lets see if we can get another correction to 15 EMA now and then a new high which can move our SAR in 5400

range

Cheers

SH

15th February, 2012



Nifty makes a new high now around 5500 ..bull SAR still at 5350.... GFZ above 5525 currently...

This swing started at 4821 so around 680 points profit (530 points locked in) ... this excludes any additional

profits due to booking at GFZ and re-entering at 15 EMA.

Cheers

SH






15th February, 2012



Hi all,

Lets try and follow the same strategy on 5 mins charts too for traders who want smaller stop losses .... no

greater fool's zone and this method should be followed on just SARs.

5 minutes trade: current longs with bull SAR at 5395

30 mins trade: current longs with bull SAR at 5350

Cheers

SH

15th February, 2012



Quote:

Originally Posted by NTrader42

Hello SH

for 5 Mins, should it be traded only in intraday mode, without carrying position to next day?

Thanks

NT

Can be carried....

16th February, 2012



Quote:

Originally Posted by NTrader42

SH

For the 5 mins system, How about taking trades only in the direction of 30 Mins swing trade ?

Effectively becomes a nice system to sacle-in / scale-out with the swing trade.

Thanks

NT

Yes can be done.

I am running with 5 mins experiment here in forum to showcase why I always recommend trading on larger TFs

cheers

SH









16th February, 2012



Quote:

Originally Posted by Bakul Shah

Sir,

How about working with 15 min period. It may better result than 5 min!!!

Bakul

Yes, 15 is worth trying ..... (no experiments here)

If SAR on 30 seems to be too high ... 15 can genuinely be pursued (i personally do look at it while trading)

15 mins - longs booked at 5517 today (4888 to 5517 profit 630 points)

This short has SAR 5566

Cheers

SH

24th February, 2012



Quote:

Originally Posted by thanibee

Is the bear SAR at 5541.8 now? Since it has expired (Feb. Futures), and we will be using March futures data from

tomorrow, how is this going to affect? March Futures Bear SAR is 5591.25. Which one should we use as the SAR?

Thanks

In such cases please refer to spot prices.

Nifty spot has made a new low today so 5537 spot becomes new SAR.

However on NF March charts recent highs are 5563 highs so you can use either 5537 spot or 5564 NF as new

SAR

March series shorted from 5639 SAR 5564 now

Cheers

SH







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