Long Term Secrets To Short-Term Trading

Figure 8.2 Greatest swing values in the bonds. 
computer shows. In real-time trading, I will use a stop at or slightly above or below the open, once I am filled 
on a long or short. 
If price goes back there, after rallying the percentage of the swing value required to trigger a signal, the 
move we were playing for is questionable, we got a momentum run, but it didn't stick. In absence of this 
stop, you certainly must have one taking out the low of the day, this would be a sure sign of failure, thus 
resulting in less loss than illustrated by the computer printout. 

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Figure 8.3 Greatest Swing value at .80 in the S&P 500. 
More Uses for the Concept 
Ihave also used this idea to help me when I am confused. If I am in a position and looking for a place 
to exit, or maybe want to establish a position but do not have any clear-cut entry points, I will use the GSV 
to tell me when the current spate of buying/selling has been reversed. All I need to do is calculate the buy 
and sell swing values running the average as a tight stop or entry point. 

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Intraday traders can use this value a bit differently. What many of them want to do (not me, though) 
is sell what should be an overbought area and, buy an oversold area. In this case, the GSV will tell you 
about how far above the open you can sell, the largest failed value of the past few days, and then you 
would place a stop and reverse slightly above that value. You would buy below the open a distance of the 
largest failed down swing value, with a stop below that. 
Here is a case in point. Table 8.1 shows the daily action of the S&P 500 in March 1998 along with 
the sell swing values. Once we arrive at the 4-day average on March 16 and multiply it by 180 percent we 
have a buy point (5.50 points) that much below the opening on the 17th with a fill at 1086.70. Table 8.1 
shows how it looked. 
Your stop on the long should be 225 percent of the 4-day average swing value of 3.57 or 8.00 - the 
1092.20 open giving us a stop at 1084.20. 
You can always determine the general area where a market should find support and resistance with 
the GSV concept. My work suggests contra trend moves of 180 percent with a 225 percent stop work 
quite well. 
Yet another way I have traded and made money with this idea is to wait for a down close in the S&P 
500 on Friday. I then buy Monday at the open plus Friday's high minus Friday's open swing value. I back 
this with Bonds closing on Friday greater than they did 15 days ago. The following results show simply 
using the bailout exit and a $2,500 stop. Practically speaking, I exit the trade at the open minus the swing 
value, unless the swing value is very large. In that case, I admit defeat if price trades below the lowest 
price seen in the day prior to going long. The time period here is from 1982 through March 1998. This is 
the most successful interday mechanical trading technique I know of. 
It does not require a quote machine, any software, or constant phone calls to your broker. Once the 
setup is present (Bonds greater than 15 days ago, and Friday closes down), you buy at the next day's open 
plus the buying swing value from Friday. Certainly, this takes no great skill, only the willingness
to