Swing Highs and Swing Lows: Marking Extremes Formally
A swing high is a bar whose high exceeds the highs of the bars on both sides. A swing low is the mirror image. This is the most formal definition of an extreme, and it is what turns talk about structure into testable rules.
The formal definition and its parameter
The classic version: a swing high is a bar whose high exceeds those of N bars to its left and N to its right. With N=1 there are many extremes and most are noise; with N=5 only the noticeable ones remain. The parameter sets the scale of the marking, and choosing it is not a detail: it determines what you will treat as structure and what as fluctuation within it.
Why formal marking matters
Without it, market structure is a matter of taste: one trader sees a broken trend, another an ordinary pullback. A fixed parameter makes the marking reproducible — you will get the same extremes tomorrow and on another instrument. That same condition makes rules testable: a system resting on 'significant extremes' cannot be backtested until significance is defined by a number.
The confirmation delay
The formal definition carries an unavoidable cost: a swing high is only confirmed N bars after it forms. In real time you always learn about an extreme with a delay. The larger N, the more reliable the marking and the later the confirmation. This is a trade-off rather than a flaw — but it is worth remembering when evaluating a backtest in which extremes appear instantly.
The link to structure
Marked swings are the points from which the sequence of highs and lows is assembled. Rising swing highs and lows mean an uptrend, falling ones a downtrend, mixed ones a range. Stops are also anchored to swings rather than to arbitrary distances: behind the last swing low in a long, a stop being hit means the idea has genuinely broken.
We deliberately publish no measurement for this figure. Its marking cannot be formalised unambiguously, and any detection algorithm would reflect our arbitrary thresholds rather than a property of the market. Where the definition is strict — as with the inside bar or engulfing — we test the pattern on data and publish the result. Here it is more honest to say there is nothing to test.
This material is educational and is not individual investment advice. Trading forex carries the risk of losing capital.
Frequently asked questions
How is a swing high defined formally?
As a bar whose high exceeds the highs of a set number of bars to its left and right. That number sets the scale: the larger it is, the fewer extremes and the more significant they are.
How many bars should I use?
It depends on the scale of the task. One or two produce many small extremes; five or more leave only the noticeable ones. What matters most is fixing the parameter in advance and not changing it case by case.
Why is a swing confirmed with a delay?
Because the definition requires bars to the right of the extreme. Until they close, the point is unconfirmed. This is an unavoidable property of the method and easy to overlook when testing on history.
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