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Advanced Swing Trading: Strategies to Predict, Identify, and Trade Future Market Swings Hardcover – September 29, 2003
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“Crane’s publication adds to the relatively limited amount of literature on a valuable subject.” (The Technical Analyst, May 2004)
From the Inside Flap
The essential ingredients required for swing trading have been around for decades. The fact is that as long as human behavior remains the same, market behavior will be the same. As a result of this natural phenomenon, every marketwhether it be stocks or commoditiesoffers swing trading opportunities. But finding these opportunities and capitalizing on them can be a daunting task if youre unprepared.
In Advanced Swing Trading, John Crane, a veteran trader and cofounder of Traders Network, discusses his work with Action/Reaction trading theory, and illustrates a whole new way of using time, price, and patterns to predict, identify, and trade future market swings. Chapter by informative chapter, youll be introduced to the concepts that encompass this proven method, including:
- Market behavior
- Reaction swings
- Swing trading reaction swings
- The Reaction cycle
- Action and reaction lines
- Entering and exiting trades
- Reversal dates
- Long-term versus short-term trends
- And much more
Advanced Swing Trading deals with Action/Reaction theory by combining price levels, timing methods, and confirmation patterns that strengthen the predictability of future market moves. This practical and revealing book takes a step-by-step look at the Action/Reaction theory and shows you how to profit as markets go through a complete and predictable cycle that is known as the Reaction cycle. Using this technique, youll learn how to predict the beginning of a new trend and then project the time and price of the center and end of new trends.
By using unique techniques such as action lines and reaction lines within the Reaction cycle, youll also discover how to predict the time and price of major market reversals. With this knowledge in hand, youll know whether the market is going to make a major turn or if its only going to make a small correction against the prevailing trend.
Packed with proven strategies from a respected veteran, real-world examples and clear-cut charts, Advanced Swing Trading provides an in-depth overview of the art of swing trading. This comprehensive book offers you the step-by-step guidance that will allow you to apply powerful swing trading techniques to any portfoliowithout making it a full-time joband gives todays investors fresh new methods needed to consistently improve their bottom line.
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The author mentions in his intro that he stumbled on a "repetitive, predictable pattern" that was the basis for his method. I believe that this was basically the "measured move," or the 100% extension of A-B-C swings. His charting technique with Andrew's pitchfork tries to predict this, but it is excessively complicated and only accounts for 100% measured moves. In my opinion, a fibo extension tool is far easier to use and allows traders to see the 61% and the 161% extensions as well as the 100%, which are just as useful. The time element of counting days, I think, is even more unreliable in practice. But, then again some measured moves are symmetric in time and price, so occasionally they work.
Bottom line, an interesting book, but not one that will likely have a very high predictive value.
First - the negatives. The author's thesis is that it is possible to predict market turning points in advance by identifying a reaction swing, counting backwards to a prior turning point, and then projecting that periodicity forward to derive a reflective, future turning point. But the author does not precisely define how a reaction swing is identified, or how one reaction swing is to be considered while another is to be ignored. The examples in the book do not address the reasoning involved for practical application of this method. This theoretical shortfall diminishes the utility of the reaction swing concept.
Second - the positives. Although this method was suggested before in Roger Babson's action-reaction theory (1910s), the Wetzel Market Bureau's "Course in Trading" (1930s), and Alan Andrews' course (1960s), it was not so thoroughly developed as it is in this presentation. Also, there are a number of interesting trading systems (set-ups) offered which might prove to be useful.
All in all, this book is akin to the photograph of a holy grail as compared to THE HOLY GRAIL. It is an interesting book that presents some time-honored concepts - with a few unresolved issues. More interesting (and usefully profitable) are the Wetzel and Andrews courses.
I think where some readers may become disappointed, is if they are looking for this book to give them a trading system. If that is the case, this is not the book for them. Even the author states this in the beginning of the book. Advanced Swing Trading is more about understanding market behavior along same lines of Elliott wave or W.D. Gann. However, it is written in a matter that makes it seem much simpler than Elliott wave and not as subjective as W.D. Gann - to me that is a real plus, not a negative. The author explains that knowing how to identify where you are in , what he calls a Reaction cycle, a trader can easily see if the market is reacting correctly - if it is, you know what should follow. If not, you can react accordingly.
I have read many books on trading and I believe every author uses carefully selected examples to illustrate their ideas, and this author is no exception. But, on the other hand, he did a couple of things in this book that I have never seen before. First, in chapter three, he shows how to use his Reaction swing for short-term swing trading. After a few examples explaining the process, he takes six months of the S&P and goes step-by-step through every swing pattern. He describes the entry and exit of each trade - both winners and losers - showing the end results. I must say this was impressive! (This chapter alone was worth the cost of the book ten times over.) Secondly, he takes three unrelated commodity markets and goes through the entire Reaction cycle - from the beginning of a major trend all the way through to the end of the trend - showing how the previous swing pattern was used to project the future pattern.
To be realistic, the only way a trader can know for sure if the techniques described in this book will work for them, is to get out your own charts and test it. The methods described in Advanced Swing Trading can easily be tested just on any chart. I know this because I tested it myself. After stumbling around for a little while it all came together and - for me at least - it was impressive. Not exact every time, but the best I've seen.
To be fair to the author, this was not meant to be a trading system, but offers a valuable tools that can enhance your own trading style. I believe a trader cannot be successful without understanding market behavior and this book does a good job of explaining this. It is well written and very well illustrated with plenty of charts. I recommend it as an addition to any trading library.