Powerful Yet Relatively Simple & Easy to Learn Methods You Can Use to Possibly Make You Significant Money Trading Commodity Futures from Commodity Traders Club Research (CTCR)
POTENTIAL MONEY-MAKING SWING-HIGH AND SWING-LOW TRADING TECHNIQUE
This important commodity futures trading technique should help you greatly to trade the futures markets profitably (of course, assuming it's used correctly). This "market structure" trend direction method is primarily a pattern recognition method which is incredibly simple but at the same time it's powerful, with great potential for trading profits!
It's the best way we have found to identify commodity market direction and define a bullish or bearishly structured market. It is based on the observation if you look at a bar chart of any market, you will see a bear-market consists of mostly a series of lower highs and a bull-market consists of mostly a series of higher lows.
These higher-lows and lower-highs are referred to by Commodity Traders Club as Swing-Lows and Swing-Highs, also known as Pivots, or Pivot-Points.
A swing-low is defined as a low day (or bar) with higher prices both in front and behind the low day (or bar), thus forming a swing-low. This swing-low must also be above the previous swing-low, thus forming a higher swing-low.
A swing-high is defined as a high day (or bar) with lower prices both in front and behind the high day (or bar) forming a swing-high. This swing-high must also be under the prior swing-high thus forming a lower swing-high.
The concept of buying higher swing-lows or selling lower swing highs is used by the most successful large futures traders. This concept has been used by them for a very long time. These traders don't talk much about this simple but potentially profitable technique. Surprisingly few traders are familiar with this powerful, yet relatively simple trading technique.
Merely buying higher lows and selling lower highs by themselves can dramatically improve your trading results. You also need to know where to place a target so you can get out of the market once your profit objective is reached. You need to know where to place a protective stop-loss if the trade is wrong. For this we strongly recommend you use "Drawdown Minimizer Logic®" which is explained in detail in CTCN Special Report #2. Drawdown Minimizer Logic is a mathematical method of sharply reducing drawdown based on past "adverse excursions."
A sample chart showing how to use swing-highs and swing-lows (aka market structure) to trade successfully is available by clicking-here.
The concept of only selling short providing a LOWER "Swing-High" has occurred, and only buying upon the occurrence of a HIGHER "Swing-Low" can be quite profitable.
This method appears highly profitable when used on old charts, using some subjectivity on the past data. Old charts and hindsight combine to make it look highly profitable. However, doing it in real-time trading is more difficult.
Selling providing there are 2 or 3 lower days (or bars), instead of just one on each side of a high point qualifies as a more significant Swing-High, and can be very profitable. Of course, the reverse is true for a Swing-Low buy. The more days (or bars) on each side of the swing day (or bar) is better to more clearly define the Swing-High and Swing-Low.
The problem is the fact the more days (or bars) on each side there are, it's likely more of the move is over by the time we can get into the market. Conversely, the fewer days (or bars) of each side of the pivot bar means the move has likely not progressed far. However, it's more likely to be a false or minor Swing-High/Low and consequently less profitable, or an overall loser.
It's fairly easy to identify and draw buy and sell arrows/dots at Swing-High and Swing-Low points on charts. However, doing it in real-time trading is not as easy as it appears on a back-data bar chart.
Nevertheless, the Swing-High and Swing-Low concepts (aka Market Structure) are in our opinion the best trend identification tool for trading the commodity futures markets successfully. It will "work" in any market, the actual market makes little difference. Of course, as always, trending markets make it work a lot better.
The concept of buying/selling Swing-Lows/Swing-Highs is simple and can be amazingly successful but needs to be combined with a good stop-loss method to give you protection on false signals. It's recommended you use CTCN's copyright "Drawdown Minimizer Logic®" to scientifically set stop-loss levels. "D.M.L." is used by CTCN's Swing Catcher® technical analysis software system.
Each day brings increased opportunity to increase business in current as well as new futures markets. To capture that market share you have to get the right kind of attention. You also must deliver a relevant sales experience to your potential customer.
CTCR listens and responds to traders needs with trading tools and free commodity trading information. CTCR is expert at translating the special needs of futures traders into trading solutions that work and relatively easy to use and apply to the financial markets. More free trading knowledge is at our well known Commodity Traders Club News commodity futures trading information and trader articles CTCN website.