T2W Trading Community

“Trading the Swing”

The Count
Start searching for a buying day two days after the market makes a swing high. Conversely, search for a shorting day two days after a swing low.  Ideally, the market will move in complete five-day cycles.  In stronger trends, the market will move four days in the primary direction and only 1 in reaction, allowing you to seek entry 1 day earlier.

“Check Mark” on the Test
Entries are sought opposite, or contrary to, the previous day's close. For example, if looking to buy, one first wants the market to “test” the previous day's low, preferably early in the day, and then form a trading pattern that looks like a “check mark” or a small “W” (see examples).

This pattern sets up and establishes a "double stop point" or strong support. If entering a market with only a “single stop point” – e.g., support formed by the current day’s low only without a test, then exit on the same day. These trades are usually against the trend.

Close vs. Open
The close should indicate the following day's opening direction. When a market opens opposite what is expected or indicated by the trend, you can first look to “fade” it (i.e., trade in the opposite direction) but take profits quickly. Then look to reverse!

Support & Resistance
The key question when swing trading with the Taylor method is: is today's support (or resistance) higher or lower than yesterday’s corresponding support (or resistance)?

Swing Measurements
Where is the current market relative to the last swing high or low? Always look for swings – both up and down – of equal length, and for retracements of equal percentage.