Long Term Secrets To Short-Term Trading

Figure 9.3 T-Bonds (1 5-minute bars). Graphed by the "Navigator" 
(Genesis Financial Data Services). 

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Figure 9.4 T-Bonds (15-minute bars). Graphed by the "Navigator" 
(Genesis Financial Data Services). 
The Three-Bar High/Low System 
At one point in my career, I had over 30 consecutive winning trades using this next short-term 
trading strategy. You will first have to calculate a 3-bar moving average of the high and a 3-bar moving 
average of the lows. (Each bar represents the time period displayed on your chart. Use 5-minute charts for 
lots of signal, or 15-minute charts if you want a little less hectic trading career.) This is automatically done 
on all quote machines, although "in the old days" 1 did it by hand. You can have the old days! 
The strategy is to buy at the price of the 3-bar moving average of the lows-if the trend is positive, 
according to the swing point trend identification technique-and take profits at the 3-bar moving average of 
the highs. 
Sell signals are just the opposite. This means you will sell short at the 3-bar moving average of the 
highs and take profits at the 3-bar moving average of the lows. It is downright foolish to do this unless there 
is a reason to take only short sales. Our reason might well be that our swing point reversal system has told us 
the trend is down. Then, and only then, sell the high and cover at the lows. 
Now let's try to make some order out of all this. Figure 9.5 shows the addition of the 3-bar moving 
averages and the swing lines. I have marked the 

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Figure 9.5 T-Bonds (15-minute bars). Graphed by the "Navigator" 
(Genesis Financial Data Services). 
Figure 9.6 T-Bonds (1 5-minute bars). Graphed by the "Navigator" 
(Genesis Financial Data Services). 

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points where trend changes; we switch from buying the lows to shorting the highs following these reversals. 
The 3-bar high and low entry points are also shown. The game goes like this; trend reversal up so we buy 
the 3-bar low line and take profits at the 3-bar high and await a pullback to the 3-bar low. If the 3-bar low 
would create a trend reversal for selling, however, pass on the trade. Sells are just the opposite; await a trend 
reversal down, then sell all the 3-bar highs and take profits at the 3-bar lows.