Swing Trading Basics
Swing trading is a form of trading that sits between day trading and longer term trending following.
Stock market Swing trading has been popular for years, but perhaps Forex swing trading offers the best profit potential.
This is due to the markets volatility and huge liquidity, allowing traders to open and close positions quickly.
To learn swing trading is relatively easy and it is one of the best ways of trading for novice traders.
What is Swing Trading?
As we have said swing trading sits between two other popular strategies:
Day trading and trend following.
Day trader will hold positions from anywhere from a few minutes, to a day.
A trend follower will be after the longer term trends and will hold open positions for a few weeks, months or even years.
Swing trading strategies vary, but positions tend to be held for a period of a few days, to a few weeks.
Swing Trading System Basics
A swing trading system is easy to devise and here we will give you some swing trading tips that should be included in any swing trading system.
1. Swing Trading is based on the concept of support and resistance within shorter term trends.
2. Swing trading can be done by buying into support, or selling into resistance and you can spot these opportunities in a variety of ways. Support and resistance can be denoted by trend lines, Moving averages, or Bollinger bands.
3. Once you spot an opportunity you need to enter your trade. If you are swing trading into support and resistance – don’t guess or hope that positions will hold.
You Need Confirmation!
For this use some momentum indicators such as, stochastics or Relative strength Index RSI to indicate shifts in price momentum to time your trades.
4. In conclusion, swing trading is all about spotting resistance and support and trading with a view to the levels holding or breaking.
You should also enter swing trades when price momentum is in your favor, as this will greatly enhance your chances of success.
5. Have a profit target on any position that you swing trade and don’t trail stops. You’re after the shorter term moves and profits and the best way to catch them is to use a “hit and run” form of trading, getting in and out quickly on a specific target.
Swing trading is actually one of the best trading styles for the novice trader, as it is simple to learn and apply and finally, offers good profit potential for relatively low risk.
Swing trading opportunities tend to present themselves on a regular basis, allowing plenty of potential trades. Swing trading is also easier than trend following, as it keeps the trader focused.
Things happen quickly in swing trading, within short time frames and the trader can see things happen therefore, the shorter duration of swing trading, does not require the patience of longer term trend following.
In conclusion, swing trading is easy to learn, apply; it’s exciting and allows trading with tight risk control and good profit potential.
If you spend a little time, devising a swing trading system of your own, you will find it is one of the most exciting and profitable ways of trading.
Forex swing trading forex markets offers the best trading conditions for swing trading.
The markets offer good volatility, good trends and high liquidity, which are essential for swing trading to be successful.
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