I'm flirting a bit right now with Bryce Gilmore. He has written several books, and the guy's a friend of Larry Pesavento (Harmonic Trading). So the trading style is a mixture of Gann and Fibonacci.
Anyway I've found this interesting thing he's describing in one of his books "Trade with an edge". He's calling it a 2 bar momentum swing. And because we're into this trading without indicators thing I thought of sharing this with you.
What is it?
Quote from the book:
-WHAT IS A 2 bar SWING CHART:
A swing chart measures market momentum and direction without
having regard to anything else but price range.
The swing chart swings up or down depending on the current bars
trading range when compared to the prior 2 bars, unless you
encounter an outside reversal bar.
This example was constructed from a lO-minute bar chart.
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Rules for construction of a 2 BAR Swing chart:
1. The momentum is up when the current bar makes a higher
high without crossing below the low of the past 2 bars.
2. The momentum is down when the current bar makes a lower
low without crossing above the high of the past 2 bars.
3. In the case of an outside reversal bar with a close outside the
area of the prior bar the momentum direction has changed
without taking into account the prior 2nd bar.
The same data as above in 5-minute bars:
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OUTSIDE REVERSAL BARS:
Outside reversal bars are your 1st indication that momentum is
changing and Signal you to move in all stops immediately if you
haven't been taken out already.-
And I just love his comment on "commonsense"
"Everything to do with successful trading involves commonsense, if
you don't have any then I suggest you don't trade. I have met so
many people over the years that have no idea what commonsense
is. It doesn't matter what you tell them they refuse to listen.
The only way you can make money trading is to keep
losses small!
This is the area you must concentrate all your efforts on."
Now if anyone knows if there's such a tool out there, please share! And if anyone find it useful and wants to build one, that would be grateful too!