Swing Trading
Swing Trading is a speculative strategy that focuses on profiting off changing trends in price action over relatively short timeframes. As a trading strategy, swing trading falls between day trading, where trades are closed on the same day as they are bought, and long-term trading, which often involves years. Swing trading capitalizes on buying and selling the interim lows and highs within a larger overall trend. It utilizes technical and fundamental analysis to identify market direction as well as optimal price entry and exit points in the market. Swing traders use a number of strategies and patterns to ensure success in deals. The most popularly used patterns are multi-day chart patterns, moving averages crossovers, head and shoulder patterns, cup and handle patterns, and flags and triangles.
TOP SWING TRADING STRATEGIES
Fibonacci Retracement.
Swing traders this to identify the resistance and support levels in the foreign exchange market. This also helps them identify the market trend reversals. The most accurate Fibonacci retracement levels that show market reversals are 23.6 percent, 38.2 percent and 61.8 percent.
MACD Crossovers.
The Moving Average Convergence Divergence crossovers trading strategy helps swing traders identify bullish and bearish market trends. Two moving averages are plotted on the chart, a fast-moving average and a slow-moving average.
Support and Resistance.
The Support and Resistance trading strategy helps swing traders make accurate buy and sell decisions in the Forex market. The support level is a point at which the falling prices stop falling, change their direction and start to increase.
T-Line. The T-line trading strategy helps swing traders identify the most profitable entry and exit levels in the Forex market.
The T-line is basically the 8-day exponential moving average and helps you make long and short trades with significant returns.
Japanese Candlesticks. Swing traders use the Japanese candlestick trading strategy to enhance their technical analysis by understanding the currency pair’s opening, closing, low and high prices in the market.
ADVANTAGES OF SWING TRADING
Potential for significant profits.
Swing traders can capture larger price movements compared to day traders, potentially leading to greater profits.
Flexibility.
Unlike day trading, swing trading doesn’t require constant monitoring. It’s a suitable strategy for those who can’t devote their entire day to trading.
Less stressful.
Since trades aren’t opened and closed in a single day, swing trading can be less stressful than day trading.
RISKS OF SWING TRADING
Swing traders are exposed to overnight and weekend market risks. Unexpected news events can cause significant price gaps.
Requires skills and knowledge.
Successful swing trading requires a good understanding of both technical and fundamental analysis
Potential for losses.
Like any trading strategy, swing trading doesn’t guarantee profits. Traders must be prepared to face losses.