Long Term Secrets To Short-Term Trading

"amount" of sellers in the marketplace. Thus a sell signal may be in effect as we have drawn more sellers 
in today than yesterday. 
Figure 8.1 Soybeans (daily bars). Graphed by the "Navigator" 
(Genesis Financial Data Services). 

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We can take this a little further. If I add up all the open to low swings for the past few days, I have an 
average of the amount of selling swings that have taken place and suspect that any swing from today's open 
that exceeds this average may be indicative of a sell signal. 
But hold on, it is a bit more complicated. To really get a handle on the sellers, you need to take this 
measure on just days that closed above the opening, as this swing value is the amount price could decline 
without triggering a down close day. 
By the same token, if you were to add up the swings from the open to the daily highs (on down close 
days), you would arrive at the swing values the market could rally without setting off a wave of buying 
resulting in an up close. 
Greatest Swing Value 
I call this concept "greatest swing value (GSV)." It can be used in many profitable ways. The more 
work you do with the concept, the more you will appreciate the logic of finding the upswings on down days 
and downswings on up days. I categorize these swings as "failure swings": the market could swing that 
much, yet not hold it or follow through, and then closed in the opposite direction. 
Let's look at some things you could do with these values. You could determine the average failure 
swings, say for the past few days, and use that as your entry added or subtracted to the next day's opening. 
Or how about taking all the failure swings for X number of days and then take one or two standard 
deviations of that value added to the value to trigger your entry? 
I will start with a simple and profitable way of using these values for trading the Bond market. My 
first step is to create a setup for the trade, as I don't want to trade on just one technical goody all by itself 
My setup will be an oversold market: prices have been declining so a rally of some sort should be in the 
future, and I am combining this with one of my prized possessions, the TDWs, as discussed earlier. 
In this case, the first part of the setup is to have today's close lower than the close 5 days ago, 
suggesting Yin may turn into Yang. I also want to limit my buying to only one of 3 days of the week; they 
are Tuesday, Wednesday, and Friday. 
Once that part of the setup exists, I will take the difference from open to the high for each of the past 4 
days and divide that by 4 to get the average "buy swing." I want real proof the market is tracking in fresh 
ground, new territory, so I will be a buyer above the opening at an amount equal to 180 percent of the 
4-day swing value average. 

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The sell signal is a mirror image in that I take the distance from the open to the low for each of the last 4 
days and divide by 4 to get the average. This is also multiplied by 180 percent and subtracted from the 
opening if the sell setup exits. 
The sell setup consists of Bonds closing greater than the close 6 days ago, and for even better 
performance, I would also like to see the price of Gold lower than the price of Gold 20 days ago. 
Whether long or short, my stop is $1,600. I will take profits on the first profitable opening after being in 
the trade for 2 days. The results of this program from 1990 to 1998 are shown in Figure 8.2. As you can see, 
they are rather remarkable telling us the importance of setup criteria coupled with the greatest swing value 
concept. Frankly, I do not know of any Bond systems being sold by all the technical hot shots that can match 
these results. 
Stock Index Trading with Greatest Swing Value 
The same basic formula works for trading the S&P 500. Again, we will take 180 percent of the 4-day 
average buy swing value (the highs minus the opens) and, for sell, the 4-day average swing sell value (closes 
minus the lows). As you might suspect, the results can be dramatically improved by demanding Bonds close 
higher than 15 days ago for a buy and lower than 15 days ago for a sell. Fundamentals do make a difference; 
don't let any frayed cuff chartist or fast-talking technician tell you otherwise. Our TDW filter will be to buy 
on Monday, Tuesday, or Wednesday. Shorts will be taken any day but Monday. The setup also consists of a 
close lower than 6 days ago for a buy, higher than six days ago for a sell, giving us an overextended market 
condition. 
The results say it all, $105,675 of profits with 67 percent winning trades using a flat dollar stop of 
$2,500 and the bailout exit (Figure 8.3). Not as much money was made on the short side, but money was 
made; and considering the gargantuan bull market this took place within, the results are pretty good. Proof 
comes from the average profit per trade of $427. 
Better than It Looks 
The results shown may also be considerably better than they appear. This is because my computer 
software does not allow us to bring into play a protective stop on the day of entry, that you can use in 
real-time trading. Thus our real time trading stop is most likely going to be closer to the market than what 
the

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