It involves buying higher swing-lows and selling lower swing-highs. Also known as pivot-points.

A definition of these swing-highs and swing-lows is appropriate here:

A swing-high is a high bar with lower bars on both sides of it.
A swing-low is a low bar with higher bars on both sides of it.

The more lower bars to the left of a swing-high the better.

The more higher bars to the left of the swing-low the better.

That makes them more significant and presumably more powerful swing points. However, only one bar on either side is acceptable (but two or more to the left are usually stronger signals).

My trading methodology requires two (or more) consecutive swings, with the second one being a higher swing-low than the preceding one for a buy. Alternately, the second swing-high must be a lower swing-high than the preceding one for a sell.

The actual long trade entry takes place on a buy-stop two ticks above the high price of the last bar (the bar following the swing-low pivot bar), for a buy.

The short trade takes place on a sell-stop at two-ticks under the low price of the last bar (the bar following the swing-high pivot bar), for a sell.

Your stop-loss order is placed 6-ticks under the lowest price of the last swing-low bar on a long trade.

The short trade stop goes 6-ticks above the highest price of the last swing-high bar. You can make some really outstanding money using this simple, but very effective trading methodology.

By David Stone

Secrets of time durations of profitable & losing day-trades

Most successful daytrades last approximately 7-minutes. That assumes the trader is using a reasonable profit objective and exiting the trade as his profit target gets hit.

Most losing daytrades last approximately 45-minutes. That’s because the trader relies on hope once he sees the trade appearing to fail. He hangs on to the losing trade hoping it will turn, finally the loss becomes to big forcing him to exit the trade.

How many trades are needed for statistical validity?

Many traders ask how reliable is their track-record as far as statistical validity goes.

They may see some statistics on seasonal trades showing a market was up from April to June during 12 of the last 14 years.

They may have experience with their own trading system showing 8 of 9 winners following say a 5 unit moving average crossing over a 9 unit moving average.

None of these are valid from a statistical validity standpoint. That's because according to mathematical expert and statistician a minimum of 30 occurrences are required for statistical validity.

Please keep this in mind when evaluation a trading system. Anything less than 30 samples is not statistically accurate.