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2008issue C091-2

Swing highs, bar-count pace, and the cost-price stop

This article restates one illustrated 2007 index sequence from the archive. Editorial frame: treat it as a classroom drill in which a reversal is named only after qualified swing highs and lows are marked, market pace is counted in bars, and one stop path is written from the last opposite swing to cost.

  • A swing high is treated as relevant only after at least two bars print higher highs and higher lows, and some markets raise that bar count to three.
  • Market pace is the number of days or bars between consecutive opposite swings; a three-day advance that recaptured a six-day decline was read as a still-strong uptrend.
  • Once a swing trade is in profit, the documented rule moves the stop to cost, often after a 2% gain adjusted by the market, so an open gain cannot become a cash loss.
  • On the illustrated 2007 sequence, a break of 14705 confirmed the downtrend, later structure trailed the short stop to 15069, and no long was allowed after 13779 until 15069 was crossed.
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Current trackSwing chart34 readingsSwing trading44 readingsTrailing stop87 readings

Read the sequence before naming the reversal

Editorial frame: TradersWeek uses the illustrated 2007 index sequence as a classroom drill. A reversal may be named only after qualified swing highs and swing lows are marked, market pace is counted in bars, and a single stop path is written that ratchets from the last opposite swing to cost.

The archive describes a swing-chart as a price map drawn from those qualified highs and lows on open-high-low-close structure rather than from derived indicators. Swing-trading is the procedure that then states when to enter, when to exit, and when to stand aside from those swings.

How a swing high or swing low qualifies

A swing high is a peak treated as relevant only after a minimum run of higher-high and higher-low bars. The archive treats that peak as relevant only after at least two bars print higher highs and higher lows. Some markets raise that requirement to three bars.

A swing low is a trough treated as relevant only after a minimum run of lower-low and lower-high bars.

The 2007 index sequence

On the illustrated 2007 index chart, the August 6 low at 14705 was followed by three days of higher highs and higher lows and an August 9 swing high at 15542.

A break of 14705 on August 10 was used as downtrend confirmation: longs were to be closed and any short carried a stop at the 15542 swing high.

After the August 14 swing high at 15069, a break of the August 10 low at 14570 was the trigger to trail the short stop to 15069.

After the August 17 low at 13779, no long was allowed until 15069 was crossed, and that long used 13779 as its stop.

BSE Sensex, July–December 2007

This is the 2007 Sensex path the source used as its classroom tape: a mid-August washout, then a faster autumn advance and a noisy hold near the highs. Exact swing prints came from the figure labels; the weekly connectors were read off the candlesticks.
This is the 2007 Sensex path the source used as its classroom tape: a mid-August washout, then a faster autumn advance and a noisy hold near the highs. Exact swing prints came from the figure labels; the weekly connectors were read off the candlesticks.BSE Sensex · Daily · 2007-07-02T00:00:00.000Z to 2007-12-31T00:00:00.000Z

Labeled levels 13779, 14570, 14705, 15069, 15542, 19987 and 20498 are the printed callouts. Other points are weekly visual readings on the figure’s 13500–21000 scale and are approximate.

Market pace from the bar count

Market pace is the number of days or bars required to travel between consecutive opposite swings.

A three-day advance that recaptured a six-day decline was read as a still-strong uptrend. After a high of 19987, a decline that took more than three days to reach the prior low was classified as lacking strength and as a condition for considering a long near that low.

Trail the stop, then move it to cost

A trailing-stop is a protective level moved only in the trade's favor as structure or open profit changes. In the August sequence the short first carried a stop at 15542. After the later structure break, that stop was trailed to 15069.

Once a swing trade is in profit, the documented rule moves the stop to cost so an open gain cannot become a loss. A cost-price stop is that move to the entry price, so an open gain cannot become a cash loss. A common threshold is a 2% gain, adjusted by the market being traded. The two-percent rule is that market-dependent threshold.

Educational research material, not investment advice. Historical source context does not establish present-day performance.
20 of 30 in the Swing chart track
201024-29 pp.Next on Swing chartConstructing suspect versus confirmed swing trendsA classical uptrend is a series of higher highs and higher lows, and a classical downtrend is a series of lower lows and lower highs, both built from price alone.
All readings on this track · 30 readings
  1. 1982Constructing range resistance from harmonic swing divisions
  2. 1984Gold swing chart: failed highs, wash-out, and a boxed pivot range
  3. 1988Remaining life on a percent-filtered swing chart
  4. 1991Ranking turning points with percentage swing filters
  5. 1991Five-count swing-chart construction and break rules
  6. 1992Constructing the Gann quarterly swing from the prior quarter's intraday range
  7. 1992Audit quarterly swing breakouts with a slower average cross
  8. 1992Weekly swing invalidation and the trailing stop
  9. 1992Quarterly swing chart construction and trend duration
  10. 1998A two-bar swing is unfinished until it names the stop
  11. 1999Multiple time-frame swing-channel trade setups
  12. 1999Separate two-bar swing direction from peak-valley trend
  13. 2000Constructing peak-trough swing reversals
  14. 2002Swing charts as shared grammar for trading mentorship
  15. 2002Confirming the last leg of a zigzag trend filter
  16. 2004When a late trend bends: test the pause before sizing a reversal
  17. 2006Crude oil swing counts and cycle clusters
  18. 2006When late rallies flatten: a swing-chart classroom
  19. 2006Relocating trading certainty to the decision process
  20. 2008Swing highs, bar-count pace, and the cost-price stop
  21. 2010Constructing suspect versus confirmed swing trends
  22. 2010Constructing swing charts from clear bar ranges
  23. 2010Building price force maps from two-bar swings
  24. 2010Clear-method swing-chart construction
  25. 2011Treat a squared-chart swing forecast as a same-day hypothesis
  26. 2012Cycle mode construction from aligned bandpass swing waves
  27. 2013Stacked swing lows and breakout retrace tests
  28. 2015Building swing charts from perceptually important points
  29. 2015Construct a zztop from perceptually important points
  30. 2016Isolating swings with percentage trend thresholds
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