Are There Any Good Swing Trading Strategies?

So what makes a good swing trading strategy? What is swing trading all about and how can one strategy be better than another. Are there any key points that a strategy must address to truely be considered good? Swing trading is based on proper trend identification and using market rallies and market pullbacks to enter.

The most important element of swing trading is trend identification and trading only with the trend. What makes a trend so important for swing trading? It is said that the smart money typically follows the trend and if you follow the smart money you stand a good chance of winning. This makes sense then that the most reliable trading strategy is one that goes with the trend. This greatly increases your chances of making a profit and being successful in the long run.

Swing trading strategies are typically all about using rallies or pullbacks to enter. Swing tading isn't an enter the market anytime you want style of trading, swing traders most often wait for rallies or pullbacks before they enter. By waiting for a retracement to occur, they are able to enter a trade at a price which is in their favour. Why does this matter? Entering the market at a price that is in your favour means you stand to profit more.

A good swing trading strategy is one that is based around trend trading and entering the market at a time where you stand to get a good price. Swing traders manage to do this by waiting for price to retrace before it continues on with the main trend.

Swing Trading Psychology

You may not have thought of it before but the hardest thing about trading is the psychology of it. Sadly, most traders completely ignore psychology and never give it the attention it deserves. Psychology plays such an important role in swing trading that it is the key to trading success.

Psychology here is all about how you manage yourself when trading. Trading, for many people, can bring out a wide variety of emotions, more so when a trade they have just placed begins to make a large profit or loss. It is these emotions that lead to some people making hasty decisions as they are listening to their emotions and not making proper decisions.

Why do many traders think trading psychology isn' t important or it is a joke? The idea of finding out bad things about yourself is what keeps most people away from learning about psychology. This is the same kind of fear that ruins a good trade.

Success or failure at swing trading is entirely dependant on you. Are you ready to suffer that loss or enjoy that win? Changing your thinking is crucial to being successful in trading.

What is Proper Swing Trading Money Management?

Managing your trading funds well is the key to winning at swing trading. If traders have poor money management, they more often than not begin to increase the size of their trades after they get a few winning trades under their belt. They do this with the hope of increasing their returns exponentially. However, this style of trading thanks to poor money management usually results in traders blowing up their trading accounts and losing more money than they make.

Effective money management should cover all of the following:

Detach yourself emotionally from the money.
Never trade more than you are comfortable with.
Never risk more than you stand to win.

First, you should place no importance or emotions on the money you use for trading. It is best to use money for swing trading that you know you can live without. This isn't about failure or the worry of failure. It is about being smart. Trading with your child's college funds will only add unwanted stress. Do you really need to make trading any more difficult by worrying about how you will feed your family if you lose next week's paycheck? Of course not.

Second, start trading with small amount. Don't rush yourself. The markets will be around for years to come and you should be in no rush. Just how small should you start trading? The answer to this depends on you, what do you feel comfortable with. When trading, you should be focused on trading and not on how much money you may win or lose. To avoid having this happen, don't trade with amounts that make you feel stressed or uncomfortable. You can even start trading using nothing more than a few cents. What is important is that you are comfortable and are in control of your trading.

What are the Best Swing Trading Indicators?

Having an indicator that was able to warn or show when markets were nearing turning points would make swing trading much easier. Knowing when markets were about to rally or retrace would make it easy to pick the perfect entry points for your trades. Luckily, such indicators already exist and make trading much easier. These indicators are known as momentum indicators.

The majority if indicators are known as lagging, but momentum indicators are leading and lead price. Basically, momentum indicators offer an insight into what price may do in the near future. Momentum indicators work on the basis of measuring a currency pair's level of momentum. As the speed of change in price begins to slow down, momentum indicators help you to indentify this loss of momentum and warn that there may be a rally or retracement in the near future. Momentum is essential to managing any trades you have by knowing in advance where price may go.

A very popular and widespread momentum indicator is RSI. The RSI (relative strength indicator) shows levels of a currency pair that are considered overbought or oversold. When the indicator is in these areas, a trader should be on the lookout for potential price retracement. When a market enters these areas of overbought or oversold, price typically adjusts to the new levels before it continues on. Being able to know that price may make adjustments in the near future, you can manage your trades before it is too late and essentially increase your trading edge.

If you are looking for someway to know in advance where price may go, check out what momentum indicators. The RSI is one of the oldest and most trusted trading indicators available. This may just be the trading indicator that you are looking for to give you an edge in your swing trading.

Which Markets Are Best For Swing Trading

Swing trading offers a trader the chance to reap massive returns but without the usual high levels of risk you may find in other styles of trading. Swing trading is not limited to any specific market and can be used on any market around the world. However, a market must posses to main key factors in order for you to be able to enjoy the benefits of swing trading.

First, swing trading requires a market that is known to trend more than going sideways. Some markets are seemingly randomless and offer no explanation as to why they move like they do. Swing traders prefer markets that trend more often than not. This must be present to allow you to take chunks or slices out of the market and make money.

Secondly, volatile markets are not suitable for swing trading. If your market is too volatile, it will be difficult to open and close trades in time before price moves against you. Swing trading takes time and as a result if a stock moves too fast or too abruptly in any one direction, it does not give you time to plan your entry and exit. The best kind of market to trade is one that is traded heavily.

To make the most of swing trading you must first find a market that has a high tendency to trend and is not too volatile. Always remember this and you will increase your swing trading edge.

Why Swing Trading Matters?

As a trader, you have available at your dispose many styles of trading, regardless if you prefer stocks over FOREX or options over futures. Trading by its very nature is risky, it would be advised to take some time and find out which style of trading offers the best and safest return on your investment. Use swing trading to gain a true advantage over the market and other players.

Two simple but powerful reasons make it clear why swing trading is second to none. The first being that you do not need to be glued to your monitor 24 hours a day watching and waiting for a suitable trade setup. How many new traders do you know that think they must sit in front of a monitor all day waiting for a trade? Probably quite a lot. Typically, this kind of trading doesn't help at all and instead ends up with blown up trading accounts. You don't need to spend hours each day watching charts waiting to pin point your entry. Swing trading allows you to spend as much or as little time in front of the screen as you want. Entering and exiting trades doesn't mean you must be near your computer all day.

The second reason swing trading is the most suitable form of trading is that it offers you the lowest level of risk. Swing traders see the big picture. They usually observe markets from the higher timeframes and can see major trends much more clearly. Trading low level timeframes is difficult as the trends come and go much faster. The trends they see may only last minutes or hours. Swing traders can identify and trade in the direction of major trends which can last days, weeks, months or even years. By being able to trade in the direction of these major trends, returns on your investment are increased greatly while the chance of a loss is reduced significantly.

Everyone is different and as a result the style of trading you prefer might be different to someone elses, but if you are looking for high reward with low risk then nothing comes close to swing trading. Swing traders usually follow the smart money thanks to their preference of trading higher timeframes and only trading in the direction of the trend.

Just What Is Swing Trading?

Do you know about swing trading? Swing traders ride the swings or oscillations that markets make as the stock or currency pair pivots from one price level to another. Swing trading is a style of trading that can be used on any market. The main three styles of trading are day trading, swing trading and trend or buy and hold trading. Swing trading is found in between day trading and buy and hold trading and is highly recommended, no matter what you trade. Let's take a look at the other styles.

Day traders typically keep their trades confined to a single trading day, hence the name. Scalping is also considered a day trading style of trading. While sclaping can offer extremely high rates of return, it does so with very high risk levels. Trend traders, or buy and hold traders, usually involve trades being held for several weeks to months. A trader typically needs substantial trading capital to be able to make any decent profit from buy and hold trading.

Swing trading is medium term focused and usually has traders holding trades for several days, but less than a week. Do traders hold trades for longer periods? Of course, but this is just a general rule of thumb. Some markets are more suitable for swing trading and it is important that you are trading the right currency pair or stock. High rates of return with low risk is what make many traders swing trade. This is the perfect balance for trading profitably.

Buy and hold trading typically involves high levels of capital that far exceed the profit potential. Only swing trading offers high rewards with low risk. Swing trading offers low risk but the potential to make substantial profits in both forex and stock markets.