The Swingcounter
The Swing Counter – translated from the Dutch word Swingteller – was developed by the Dutch trader Nico Bakker. This tool visualises:
- the start of a price swing,
- the duration of the price movement, and
- the probable end of the price swing.
This is how the Swingcounter works
The start of a price swing is indicated by the number 1. An upswing is green +1. A downswing is red -1. The numbers +1 or -1 will appear when the close of a candle makes a price movement of a particular size.
The subsequent price movement is indicated by the numbers 2 to 9.
When a price movement does not succeed in reaching the
number 9, the price swing is considered has having failed. The
letter ‘F’ appears in the chart to indicate a failed price
swing.
When a price movement reaches the number 9, it is considered a full price swing. The counting stops for 1 candle. Trader Nico Bakker refers to this 10th candle as the rest candle.
When the 11th candle closes higher (or lower) than the previous three candles, the swing counter starts again at 1.
This example shows two full price movements. In each case the count reaches 9 and the rest candle (no number) appears.
According to Nico Bakker the probability of a trend reversal increases significantly after a full price swing (+9 or -9).
The tool also helps traders to decide when to close their position. A full upswing from +1 to 9 followed by a red rest candle, suggests closing a long position. A full downswing from -1 to 9 followed by a green rest candle, suggests closing a short sell position. This latter scenario is visible in the previous example.
The Swingcounter is easy to use
Traders using the NanoTrader trading platform can opt to highlight the starts of the price swings (candles with the number 1) and/or the end of the price swings (candles with the number 9).
Trading with the Swingcounter
The Swingcounter can be combined with other tools and indicators in the NanoTrader trading platform. The first logical step is to add a trend filter, and only trade in the direction of the trend.
A trend filter colours the chart background green, when the market is in a bullish trend. When the market is considered to be in a bearish trend, the chart background is red.
In this example the Swingcounter is combined with the SuperTrend indicator. The start of a price swing in the direction of the trend can be used as a trading signal (see the arrows in the chart).
In this example the trader uses even more NanoTrader functionalities in order to trade with the Swingcounter:
- The SuperTrend indicator is used as a trend filter.
- An automated order is triggered when a price swing (in the direction of the trend) starts.
- The open position is surrounded automatically with a price target and a stop loss. The stop loss is the famous periods-high-low stop. This stop follows the price swing.
In this example the trader uses the possibility to manually slide the price target and stop loss orders by clicking the triangles in front of the order label. In addition, the trader uses the Tactic buttons to manage his order in the chart. These buttons are particularly used when trading in very small time frames.
Swingcounter practical implementation
- Open the chart of the instrument you wish to trade.
- In the WHS Proposals folder, select the Swingcounter in the tools section.