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2011issue C0762-69

Four-color volume-price states for long-only swing actions

Each bar is assigned one of four colors by comparing its close and volume with the close and volume from two weeks earlier. A mechanical long-only swing procedure then buys after green or blue, stands aside on red or orange, and exits with a 1% trailing stop.

  • Each bar receives one of four colors by comparing that bar's close and volume with the close and volume from two weeks earlier.
  • The mechanical long-only procedure buys after green or blue bars, stands aside on red or orange bars, and exits with a 1% trailing stop.
  • A software version treats the two-week comparison as a 10-bar lookback, enters on the next bar after green or blue, and trails a percentage below the highest close since entry.
  • A backtest note states that reported profitability can fall sharply once a one-bar delay is applied to the trailing stop.
Entries in this reading3 entries
Current trackSwing trading44 readingsVolume-price analysis129 readingsMechanical trading system158 readings

Four colors from a two-week comparison

Volume-price analysis is applied here as a four-state label on each bar. The label is assigned by comparing that bar's close and volume with the close and volume from two weeks earlier.

Green marks a close and volume both higher than two weeks earlier. Blue marks a higher close without higher volume. Orange marks a close and volume both lower. Red marks a lower close without lower volume.

A mechanical long-only action map

Swing trading is written as one mechanical trading system. The procedure buys after green or blue bars, stands aside on red or orange bars, and exits with a 1% trailing stop.

The color of the bar is therefore the input that chooses among enter, trail, or stand aside. There is no discretionary rewrite of the map after the bar is classified.

A 10-bar software version

A software implementation treats the two-week comparison as a 10-bar lookback. It enters on the next bar after a green or blue bar.

Once in a long position, the same implementation trails a percentage below the highest close since entry. The archive's mechanical exit remains a 1% trailing stop.

The same colors as a breakout overlay

The same color rules were also shown as a confirmation overlay on S&P 500 futures breakouts after consolidation. In that use, green volume bars coincided with upside breaks.

When the trailing stop is delayed

A backtest note states that reported profitability can fall sharply once a one-bar delay is applied to the trailing stop. The archive records that timing gap as part of how the procedure was specified, not as a claim about markets now.

Educational research material, not investment advice. Historical source context does not establish present-day performance.
8 of 35 in the Swing trading track
201240-43 pp.Next on Swing tradingClassify momentum, velocity, or volatility before the swing signalBegin price-action analysis by naming the market-condition, then sort the chart into a momentum-run, a velocity-run, or volatility-action.
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  20. 2017Constructing swing signals from a volume-weighted average cross
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  22. 2017One swing procedure: group leadership first, then a volume-price leave
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  31. 2019Week-range next-day breakout on bitcoin pairs
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