Swing Trading Framework 3 (Time)

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Claire Beasley
5 years ago
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2 Swing Trading Framework 3 (Time) Prepared for: Pro Trader Subscribers Prepared by: Paul Andre Prepared at: December 11, 2018 EXECUTIVE SUMMARY Objective: The main objective with part 3 of this framework is to help traders understand the fractal nature of time, how to separate time horizons properly, and locate turning points in price. Goals: Help Traders Understand the Fractal Nature of Time Separate Time Horizons By Their Function Showcase What Turning Points Look Like Highlight Ideal Trading Environments Introduce Price & Time Interconnectivity Please keep in mind that we will be strictly focusing on time during this release, with the interconnectivity of price & time coming in part 4. 2 of 9

3 THE IMPORTANCE OF TIME Every market has its own time - whether it s Bitcoin rallying throughout 2017 or Gold peaking in 2011 after a major bull market, there is always a time and place to buy & sell. If we can begin to understand that financial markets are cyclical and not linear, we can begin to see the importance of how time is critical to successful trading. This directly connects back to value in price in the sense that we must intuitively locate value in time through the use of Multiple Time-Frame Analysis by utilizing the three filters of time. The Three Filters Of Time: Monthly: The monthly time horizon sets the tone as the long-term trend is established here Weekly: The weekly time horizon provides us with the counter-trend reactions Daily: The daily is our timing mechanism, but it can also experience a lot of noise By processing each trade idea through the three filters of time, not only will you boost your risk-adjusted return, but your confidence in markets will increase through the direct experience of locating turning points in price. 3 of 9

4 TURNING POINTS Definition: A point at which a decisive change takes place; critical point; crisis. It s All About Timing At the end of the day, successful trading is all about timing. Often times, we get caught up focusing on drawing trend-lines, outlining support & resistance, and even obsessing over entry / exit strategies while disregarding the importance of time completely. Think about it would any of our technical analysis tools matter if we knew the exact time a turning point was about to take place? Of course we do not have a crystal ball at our disposal to locate these exact turning points in advance, but I want you to start thinking about time as the most important factor when placing a trade. As traders, we must always seek to place positions during the maximum point of entropy which occurs at significant highs/lows; forming key turning points. 4 of 9

5 Multiple Time-Frame Analysis Strategy: Identify Monthly Trend: The long-term trend of a market can only change on the monthly time horizon. If we identify whether a market is bullish or bearish on the monthly; we can then easily define our counter-trend reactions on the weekly. Wait for Weekly Counter-Trend Reaction: The weekly chart is the best performing time-horizon for counter-trend reactions. This allows us to fade a bearish monthly trend, or buy dips at value within a monthly bull market. Time Weekly Position On Daily Time Horizon: Once we see the weekly time horizon reaching a turning point with deceleration after a significant counter-trend reaction, we can then refine our entry by timing the weekly position on the daily with more finesse to increase Risk:Reward. Stochastic RSI: I highly recommend utilizing the Stochastic RSI on TradingView to help you identify highs/lows on the weekly time horizon, assisting you in identifying turning points in price. Keep in mind that the Stoch RSI will never override price action as it s best used as a Warning Signal that price may be about to turn after a significant weekly reaction. 5 of 9

6 Real-Time Example: NZD/USD Monthly Time Horizon: Bearish Trend Since January 2018 We can clearly see the NZD/USD has been moving lower for the entirety of 2018, providing us with a clear indication that the Kiwi Dollar is in a long-term bear market. 6 of 9

7 Weekly Time Horizon: Counter-Trend Reaction Began October 2018 The reason counter-trend reactions on the weekly are so powerful is they not only allow us to trade in-line with the monthly trend, but we re also able to enter at supreme value at the weekly 50EMA; which we outlined in the previous framework. We can clearly state that we are at value (price), after a significant weekly countertrend reaction (time), trading with the monthly bear trend that was established back in January of 2018; with the Stoch RSI peaked out for the first time since Jan of 9

8 Daily Timing Mechanism: Break Of Price Pattern Offered Timing Notice how the daily began to turn after breaking out of a rising wedge reversal pattern, fitting with the counter-trend reaction on the weekly, providing us an entry signal with definable risk above the upward sloping trend-line. Now the daily chart does not have to be used when entering a weekly position, however, it does often provide us with improved risk:reward as we are able to tighten up our stops once price begins to turn. 8 of 9

9 Interconnectivity Holds The Key As we move into Part 4 of our swing trading framework, we are going to be looking at a multitude of examples to showcase time & price interconnectivity across multiple asset classes. If you can take what you learned about value in price utilizing EMA s in Part 2, with the Multiple Time-Frame Analysis Strategy; you will begin to understand the importance of trading only when these two critical factors are in alignment. Value In Price + MTA Strategy Alignment = Trading Opportunity 9 of 9

Swing Trading Framework 2 (Price)

Swing Trading Framework 2 (Price) Prepared for: Pro Trader Subscribers Prepared by: Paul Andre Prepared at: November 7, 2018 EXECUTIVE SUMMARY Objective: The main objective with part 2 of this framework