Q1.     Is the Dow Swing Trader a "Swing" trading system or "Day" trading system?

A.      Both. We search and analyze the daily Dow charts for high probability reversal set-ups, which normally produces "Swing" trading signals, but we lock in our gains during the first few trading hours on the first day after a signal is given out just in case there is another reversal that gives back those gains.

 

Q2.     How often do you give out trade signals?

A.      We have averaged about 6 signals per month. Some of the signals have produced one day profits while others have produced multiple day profits. For example, in July 2008 we gave out 6 trade signals that covered 12 trading days of the 21 trading days in July.

 

Q3.     When are the signals given out?

A.     Usually in the evening hours between 4:00 P.M. and 7:00 P.M. New York time, for the next trading day.

 

Q4.     What's the best way to start to trade the Dow Swing Trader?

A.     All members should consider paper trading at first to help learn the movements of the markets and get comfortable with our signals.   

    

Q5.     What are the signals based on?

A.      The Dow Swing Trader proprietary charts are a compilation of six technical analysis indicators that measure supply/demand, price exhaustion, short term trend, support/resistance, convergence/divergence and sentiment.  

  

Q6.     What are "Futures" and how are they traded?

A.       Trading Futures is a way of trading commodities or a financial index like the Dow Jones Industrial Average (DJIA). Futures are a highly leveraged trading vehicle that allows you to gain maximum exposure in the market at minimum cost. Futures are traded through a Futures Broker and ultimately the Chicago Board of Trade (CBOT). The CBOT has a free tutorial on Futures trading at  http://www.cbot.com/cbot/docs/tutorial.swf

 

Q7.     What does "selling short" mean and how does that work?

A.       "Selling short" is a way to make money as the Dow Jones Index is moving downward. The traditional way to make money in the stock market is to "buy low and sell high". Most people understand that. What many people don't realize is that you can make money while the market is going down too.

How? Simple! You "buy low and sell high", but you reverse the order of your transactions. If you think the market is going downward, you sell it while it's high and buy it back later when it's lower. You make the exact same profit as if you bought first and sold later. Many people new to trading can't believe this is possible, but it is.  Many of the signal calls by us will be "short calls" meaning we will make money as the market goes down.

 

Q8.     Is the Dow Swing Trader a mechanical (automated) system?

A.       The Dow Swing Trader is a rule-based system, not a mechanical system. There is a visual component in the identification of the trade signals that cannot be automated.

 

Q9.     With all the recent volatility, what's the best way to enter a trade?

A.     The safest way to enter a trade would be a "Buy-Stop Order" for Long positions and a "Sell-Stop Order" for short positions. What this means is you won't actually enter a trade until and unless the Dow market is moving in the direction you want it to move.

For example: If the Dow Swing Trader is going Long at 10,500, you might want to set a "Buy-Stop Order" slightly above 10,500 so your order to enter the Long position would only trigger when the Dow starts to move upward. In this instance, if the Dow were to move downward from 10,500 instead of moving upward, you would not be in the Long trade and have to endure the ride down.

It's sort of like getting on a bus. You want to make sure the bus is going in the right direction before you get on it.

 

Q10.     How can I lock in my gains and still stay in a trade that may last 2, 3 or even 4 days?

A.    Great question. The safest way is to lock in your gains each day as you earn them. Then on the next trading day use a "Buy-Stop" order for continuing a Long trade and a "Sell-Stop" order to continue a Short trade. This will give you another chance to earn more gains without risking too much of the gains you already earned. If the Dow market cooperates, and sometimes it does, you may be able to pick up more profits each day of a successful trade signal.

 

Q11.     I know you don't give specific exit signals, but what would be an intelligent profit target?

A.     You are correct, we do not give specific exit signals. It's not just because all traders are different, it's because our charts give us signals for "high-probability" reversals but do not tell us the length of the reversal.

     We can suggest pivot points as possible profit target areas where you might want to lock in your gains or move your stop loss closer. Pivot points are determined by the previous sessions high, low and close. You enter those point levels in to a Pivot Point Calculator (you can find free on the Internet) which gives you the pivot point, support and resistance points. You can use weekly or daily pivot points. The Dow will often pause or reverse at pivot points.

A sample pivot point calculator can be found at http://www.nationalfutures.com/pivotcalculator.htm

  

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