EP-Swing Trading Philosophy

The EP-Swing strategy will focus on trading liquid micro and mini futures contracts, with the objective of achieving a high payoff ratio. My goal is to let profitable trades run while cutting losses quickly, resulting in average gains that exceed average losses. To accomplish this, I will adopt an anti-martingale approach, utilizing trailing stop loss orders for every open position. Given the leveraged nature of futures, a martingale strategy is not suitable for this type of instrument. This will be a discretionary trading strategy.

Initial Entry Rules

Positions will be initiated based on clear BUY or SELL signals from market indicators, with both long and short positions possible. However, each entry will require “price confirmation,” meaning that the market must meet certain price criteria before a trade is triggered.

• Stop Entry Orders:
  • For long positions, the entry price will be set at the previous day’s closing price, plus 0.875 times the median of the daily true price range over the past 84 trading days.
  • For short positions, the entry price will be the previous day’s closing price, minus 0.875 times the median of the daily true price range over the past 84 days.

The position size will be calculated to risk no more than 2% (or $500) of the model account’s initial value on each trade. For an account size of $25,000, this means the difference between the stop entry price and the stop loss price, multiplied by the number of contracts traded, must be less than $500. Additionally, no more than five positions can be open simultaneously. New trades will only be entered once there are fewer than five open positions.

Trade Management for Open Positions

The primary goal of stop loss orders is to protect profits and limit losses. Trailing stop losses will be used to implement the anti-martingale approach by locking in profits as trades move in the desired direction.

• Trailing Stop Loss:
  • All open positions will have a trailing stop loss based on 0.875 times the median daily true price range over the past 84 days.
  • After a position is entered, the initial stop loss price will be set at the previous day’s closing price.
  • The stop loss will be adjusted at the end of each trading day based on the new closing price. However, the stop loss price will not be adjusted during the trading day. For long positions, the stop loss will be calculated as the closing price minus the risk amount; for short positions, it will be the closing price plus the risk amount.

Most trades will exit when the stop loss is triggered, but in some cases, positions may also be closed early if market indicators signal a reversal:

• Long Positions: If a SELL signal is triggered by the market indicators, the entire long position will be closed.
• Short Positions: If a BUY signal is triggered by the market indicators, the entire short position will be closed.