High Probability Swing Trading Strategies

trading platform

Swing trading is an attempt to capture gains in an asset over a few days to several weeks. Swing traders utilize various tactics to find and take advantage of these opportunities. Make sure conditions are suitable for trading a particular strategy. Set a stop loss and target, and then determine if the reward outweighs the risk. If it does, take the trade; if it doesn’t, look for a better opportunity.

resistance zones

I’m not sure where you get the idea that trading on daily charts mean you have to hold a trade for years. He trades on the daily charts and holds his trades for days, sometimes weeks. I really love the way you explained the swing trading strategy it’s very clear and direct to the point. It’s very helpful specially to a person like me who has a full time job. Hi Rayner, I have been doing stock swing trading for quite a while. I’m using similar strategies like those you have mentioned and I only take good quality trades.

For example a big loss is more painful than failing/flunking in 2–3 subjects in school/college. I was never able to sleep properly while loosing, always thinking about my open positions and where market might open tomorrow. The second element of this candlestick based method is that we need the breakout candle to close near the low range of the candlestick. This is indicative of strong sellers, which really want to drive this currency pair much lower. Keep an eye on the economic calendar, which can help you determine the health of a nation’s economy, and potential trading opportunities or risks in the future. Start swing trading to potentially profit from your trading edge.

With day trading, you must have the mental fortitude to cope with the fast-paced, intense daily trading with real-time monitoring. With swing trading, you need a thick skin and the mental fortitude to ride out short-term fluctuations. Swing traders are exposed to systemic risks since their trades remain open for days or even weeks. During this period, geopolitical developments and high-impact economic news could significantly impact the asset’s price. For example, in a bullish trend wait for a bullish price rejection of lower levels ; Once that occurs a LONG trade can be initiated. The stop loss can be set below the low of the Price Action pattern and the first profit target at the most recent swing high.

In case of SHORT trades, the “stuck in a box” strategy is traded in the same way, only in the opposite direction of course. If it’s a retracement, price moving in against the primary trend should be temporary and relatively brief. Retracement trading involves looking for a price to temporarily reverse within a larger trend. Price temporarily retraces to an earlier price point and then continues to move in the same direction later. It is ideal for those who can’t monitor their charts throughout the day but can dedicate a couple of hours analyzing the market every night. Autotrading is a trading plan based on buy and sell orders that are automatically placed based on an underlying system or program.

If you are interested in learning about other methods of trading our Trading Strategy master post is a great resource. Another of the most popular swing trading strategies involves the use of simple moving averages . SMAs smooth out price data by calculating a constantly updating average price which can be taken over a range of specific time periods, or lengths. For example, a 10-day SMA adds up the daily closing prices for the last 10 days and divides by 10 to calculate a new average each day.

Once you know the https://topforexnews.org/ and stop loss price, you cancalculate the position sizefor the trade. Another method is called the Average True Range stop loss; it involves placing the stop-loss order a certain distance from the entry price, based on volatility. For long trades, a stop loss is often placed just slightly below a recent swing low and for a short trade just slightly above a recent swing high.

This is what creates a swing low and this is what will alert you into an opportunity to take a reversal and that the market may trade higher and start to fall a bullish trend. The way that we like to use and identify swing trades have been identified in previous books from Larry Williams and Street Smarts. In addition, you can use other resources such as the Fibonacci tools to help generate wonderful swing trading opportunities. Once you have caught a reversal from a swing trading opportunity, it tends to trend in that direction so from this reversal we can capture as many pips as possible. The idea behind swing trading is to find a market swing low and trade it upwards to a market swing high. Swing trading is one of the most popular forms of forex trading for beginners that uses technical analysis.

As a result, they avoid the risk of gaps from news announcements coming in after hours and causing a big move against them. Meanwhile, swing traders have to be wary that a stock could open significantly different from how it closed the day before. In this article, we will lay forward a couple of swing trading strategies that we KNOW work, or at least are working when this article is written. Knowing whether a swing trading strategy will last going forward is impossible since the markets change all the time. Moving averages are known to smooth out price action by plotting the average prices of an asset over a defined period of time. For instance, a 20-period moving average plotted on the daily chart will show the average price for the last 20 days.

market participants

The main focus of trend-following strategies is to capture the big moves in the market. Oversold in Swing TradingTraders typically use the terms oversold and overbought when they refer to these levels. The consequence of this is that the market is not priced correctly.

How to set your stop loss

The range of results in these three studies exemplify the challenge of determining a definitive success rate for day traders. At a minimum, these studies indicate at least 50% of aspiring day traders will not be profitable. This reiterates that consistently making money trading stocks is not easy. Day Trading is a high risk activity and can result in the loss of your entire investment. A swing trading style, by contrast, may have a few transactions some days and nothing on others.


If it’s been a week or longer and the price is remaining stagnant, it’s typically best to cut ties and move on to the next opportunity. Investing in the stock market is all about getting your capital to work for you – and if you’re not earning a return, you’re wasting precious time. Either way, you’re taking advantage of the short-term fluctuations along a stock’s overall price trajectory. A stop order is an order type that can be used to limit losses as well as enter the market on a potential breakout.

Counting Down Days

You may potentially miss a move if the price doesn’t come into your identified area. If you follow this simple rule, you can “predict” when a pullback will usually end. In an uptrend, you only look for longs, when the price is oversold.

The technical storage or access that is used exclusively for anonymous statistical purposes. Click below to consent to the above or make granular choices. Because if you find an opportunity in one currency pair then the correlation that it has with another forex pair means there’s a high chance for that pet also trend higher. What this means is don’t try and predict the next candlestick of a swing pattern when it presents itself that’s when the opportunity happens. Once we see signs of exhaustion through candlestick patterns analysis which is where new highs are being created but they are being pushed down almost immediately. Swing lows are found towards the bottom of a downwards trend.

swing trader

A reversal is a change in the trend direction of an asset’s price. For example, when an upward trend loses momentum and the price starts to move downwards. Because trades last much longer than one day, larger stop losses are required to weather volatility, and a forex trader must adapt that to their money management plan. Determine significant support and resistance levels with the help of pivot points.

What Is Swing Trading

This will help you avoid trading when a trend isn’t there. Combined with a bullish or bearish divergence, fake breakouts produce high-probability trade setups. Your trading platform will automatically draw Fibonacci levels on your chart.

It should not be assumed that any trades or investments described or discussed in this course were, are, or will be profitable. There are several different trading strategies often used by swing traders. Trading against the established momentum, also called counter-trend trading, can return profitable trading opportunities from time to time. Unlike trend-following strategies, trading against the momentum means taking trades in the opposite direction of an established trend. One of my favourite swing trading strategies is to buy low and sell high during an uptrend. The same strategy can also be used when trading downtrends, only that you would look to sell high and buy low.

  • Oversold levels are levels where price has been pushed down too far by sellers.
  • For example, in a bullish trend wait for a bullish price rejection of lower levels ; Once that occurs a LONG trade can be initiated.
  • Traders can take profits at the recent swing high or swing low.
  • With a trade trigger, you always know where your entry point is in advance.
  • As you can see in the example above the swing low is evident and the opportunity to trade this swing allowed us to enter the market to go higher.
  • The last bounce off the bottom is now used as the Stop-Loss level.

The https://en.forexbrokerslist.site/ above shows a higher low formed around the 38.2% Fib level during a strong uptrend. A stop-loss level should be placed just below the higher low, while the recent higher high could act as the first profit-taking target. This set of swing trading rules were first adopted and developed by the author of “The Master Swing Trader,” Alan Farley.

Tips for Success with Swing Trading

Bollinger Bands was invented by John Bollinger, and is a trading indicator that takes into account the volatility and direction of the market. It consists of a moving average, from which a standard deviation of the recent price movements is added and subtracted, creating one upper and one lower band. Trend Following VS BreakoutStill, the distinction we made is not as clear cut as it might seem. Many times, trading strategies do not fall under one category but become mixes of different logics and strategy types.

Crypto Swing Trading Strategy: How To Open High Probability Trades

These activities send the https://forex-trend.net/ inside the range again and show traders that higher/lower prices are currently rejected. Sideways action that resists giving up much ground is preferred. High Relative Strength Ratings are a key statistic for limiting your universe to the best prospects. And volume gives you confirmation that institutions are accumulating shares. Some complex strategies can be too overwhelming and confusing. Using a simple swing strategy can be all it takes to succeed in this business.

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