Swingin' Glaxo

barjon

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This follows on from dimsdaletrader's Out of the Closet thread http://www.trade2win.com/boards/trading-journals/82010-out-closet.html and explores how Glaxo was and/or could have been swing traded using the 3+ bar retracement approach from the time that the swing trend changed to UP in June (big red arrow).

I'll use our old friends Bold Billy, Sound Sam and Cautious Clarence to explore some of the options and I'll include mine for the sake of completeness.

The chart is pretty self-explanatory. Short blue lines mark 3+ bar swing lows and short whites the signal lines (they are not always depicted at the high of swing low bar, but that's where they are supposed to be). This is a mid-point chart so the spread must be taken into account for trades - I'll keep it simple, though, and just talk mid.

Point 1:

Bold Billy enters on the very next bar as the signal line is breached (h'e also out for a loss when the swing low goes by one tick 4 bars later)
Sound Sam drops to intraday and looks for some momentum behind any break - that comes on the second bar. (he's not stopped out like BB after dropping to intraday and seeing no convincing break)
Cautious Clarence waits for a close above the signal line - he gets it on the second bar but doesn't open because of next day down gap that does not come back to penetrate that close. He enters when that close is taken out some six bars later.

Me - I entered on the second bar and the price did not reach my stop-loss.

Point 2:

Another entry on the first bar after the swing low for BB and again he's taken out on the next bar by his stop loss.
SS enters on the first bar adding to his running position and is not stopped out (reason as point 1)
CC waits for a close above signal line and enters adding to his running position on the fifth bar.
Me - I add on first bar, but close out original position when the swing low low is breached.

Point 3:

By this time you'll know what BB does - he doesn't get stopped this time
You'll also know what CC does - he adds on the third bar after the swing low
SS adds on second bar as do I

Point 4

BB' in and stopped out again (and also closes running position at a touch below b/e). Price has risen around 140 points since the beginning but BB is losing money.
SS adds on the first bar - again his drop down to intraday saves him from being stopped out.
CC has already closed his running position as price seemed to break down from congestion. He takes a fresh entry on the second bar only to be stopped out on the next - he usually waits for a close below the low, but he was nervous!!. He plucks up courage to re-enter eight bars later following a close above his original signal close.
Me - I closed everything bar half initial position on the bar that stopped BB.

Point 5

You can guess what they did by now

Point 6

Before we arrived at point 6 SS, CC and me closed everything as price backed away when it neared old weekly resistance level (little red sell arrow). BB didn't and was stopped out at point 6 for yet another loss.

SS and me thought of point 6 as a double bottom even though it was marginally below the point 5 swing low, particularly given the day's action which formed a hammer or pin-bar (call it what you want). This persuaded SS to enter a new position and me to enter a half position. Both SS and me closed as price backed off from that wekly resistance (second red sell arrow)

Point 7

Too close to weekly resistance zone to interest SS, CC or me, but BB was still game - wonder if he'll make something this time!!
good trading

jon
 

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