Blog Search Back to News

Best Swing Trading Strategies For Futures Traders

When there are higher low points along with stable high points, this suggests to traders that it is undergoing a period of consolidation. Consolidation usually takes place before a major price swing . Learning about triangle trading and other geometric trading strategies will make you a much better swing trader. The Fibonacci retracement pattern can be used to help traders identify support and resistance levels, and therefore possible reversal levels on stock charts. Traders often look at the 50% level as well, even though it does not fit the Fibonacci pattern, because stocks tend to reverse after retracing half of the previous move. Day traders think in minutes or hours while a swing trader thinks in days or weeks (possibly even months if there’s enough momentum in a security’s movement).

  • Swing traders can use a wide array of technical indicators.
  • The rules-based virtual trading room on every chart plays for both long-term investors as well as active traders.
  • The forex market sees a wide range of trading strategies used on a daily basis.
  • While some swing traders pay attention to fundamental indicators as well, they are not needed for our simple strategies.

Buying and holding stocks have returned about 10% annual CAGR over the last 100 years, and many see little value in trying to time and trade the markets by swing trading. Unfortunately, almost all articles consist of unproven and untested swing trades. To make money swing trading is difficult, but we believe you face much better odds the more you backtest and generate trading ideas. As mentioned, other methods can be used to profit from the market’s short-term swings. The important point is to develop a method that works for you; implement it consistently; adhere to explicit money management rules; and keep good records so you can track your progress as a trader.

The candlestick confirms that the support held, and the swing trader will start to buy there. You can see that we often go higher afterward, although if there was a 50% pullback in the process. For the swing trader, which by its very foreign exchange market definition means that you are paying attention to the trend, continuation gaps are one of the favorite ways to play the market. One of those is to determine if we should trade a countertrend system or a trending stock setup.

Bull Pennant Trading Strategy

Traders can take advantage of both bull and bear markets, typically working in line with the main trend of the market, be it up or down. Anything over 70 is generally thought to be overbought, which can be a sign to open a short position. When the RSI drops beneath 30, meanwhile, it’s generally thought to be in oversold territory.

swing trading strategy

The company valuation did not change since more number of issued shares multiplied by the price is still the same market cap. However, it appears to be cheap, and investors tend to invest in such price trends. The market sentiment is positive, and a long position can unfold meaningful what is a swing trade gains shortly as long as the bullish trend continues. The trading setup works because the more the stock price increases, the more swing traders feel some sort of fear of missing out. For this setup, it is important to define the trading rules, profit target and stop loss level.

Why Develop A Trading Strategy In The First Place?

CFDs are complex instruments and are not suitable for everyone as they can rapidly trigger losses that exceed your deposits. Please see our Risk Disclosure Notice so you can fully understand the risks involved and whether you can afford to take the risk. They are levels where buying interest is strong enough to overcome the sellers. The price will often drop to these levels and then bounce back up again as a result of the increased buying interest.

This guide covers an example that illustrates how to swing trade stocks using a Fibonacci retracement and helps you to identify your swing trading entry and exit points. Swing trading is a short-term strategy for a trader who is buying or selling currency using technical indicators that suggest an impending price movement. This trend can span any length of time, ranging from days to weeks. Swing traders place a heavy emphasis on technical analysis as a means of tracking a currency and determining when a “swing” is likely to occur. Swing trading generally means the trader isn’t concerned with the long-term value of a currency; they’re instead looking to profit from peaks and dips in momentum. Breakouts are classic entry points for traders of all types–day traders, swing traders, and position traders.

swing trading strategy

IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. Any research provided should be considered as promotional and was prepared in accordance with CFTC 1.71 and designed to promote the independence of investment research. An overbought or oversold reading doesn’t necessarily mean that a reversal is imminent – strong trends can stay in either territory for long periods. For this reason, many traders watch for when the two lines on a stochastic oscillator cross, taking this as a sign that a reversal may be on the way. The stochastic oscillator is another form of momentum indicator, working similarly to the RSI.

The last benefit of using a simple swing trading strategy is that you won’t need to be glued to the screen for the whole day like with day trading strategies. A swing trading plan will work in all markets starting from stocks, commodities, Forex currencies, and much more. This article is going to go in-depth about a key swing trading technique on daily charts. While this may be considered advanced swing trading, this strategy is suitable for all investors. We will tell you how to do proper technical analysis and show you when to enter the trade and when to exit the trade.

This is where the fundamental and institutional traders typically establish their positions, moving the market much more than you will. So by following the herd, you can find yourself much more profitable. Bears can apply tactics used by bulls during an uptrend to potentially take advantage of a downtrend. If a security is on an upward trend, a swing trader will “go long” and buy shares, options or futures contracts of that security. The basic principles for swing trading that every beginner should adhere to is to only buy uptrends and only sell downtrends.

Trading Is Not Always Smooth

That means 10 months were spent grinding it out not really moving the needle one way or the other. The same risks we discussed earlier of overfitting can be very dangerous. So starting with a fresh strategy foundation, rules, etc. is generally recommended.

Here’s an introduction to the top indicators, including moving averages, RSI and volume. Forex swing traders might refer to this strategy as the forex EMA crossover strategy, However, we should remember it is not limited to just currencies. Any instrument, whether stocks, futures, options or cryptocurrencies, can be traded using the EMA crossover strategy. While there are many swing trading strategies available out there to swing trade, some tend to work out better over the longer term.

Based on this indicator, they can find market reversal opportunities. The Fibonacci retracement levels of 61.8%, 38.2%, and 23.6% are believed to reveal possible reversal levels. A trader might enter a buy trade when the price is in a downward trend and seems to find support at the 61.8% retracement level from its previous high. With that being the case, it’s obvious that you have a start, a stop, and your target is quite often the bottom of the trend line.

swing trading strategy

Read the Harmonic Pattern Trading Strategy – Easy Step By Step Guide or the MACD Trend Following Strategy- Simple to Learn Trading Strategy. These are some of the most popular strategies ever posted at Trading Strategy Guides. Now, may I ask your opinion about the trading idea that I’m developing, specifically on Trailing Stop Loss technique. I rely on the idea that stop loss would depend on the volatility of the price movement. So I use Bollinger Band with 10MA period but at 1.65 outer band settings.

Develop Your Trading Skills

Breakout trading is an approach where you take a position on the early side of an UPTREND, and looking for the price to“breakout”. You enter into a position as soon as price breaks a key level of RESISTANCE. Swing trading attempts to identify “swings” within a medium-term trend and enter only when there seems to be a high probability of winning. It is the level where selling interest overcomes the buyers. As a result, the price reverses and changes direction moving lower.

Types Of Swing Trading

They happen every day, on every time frame, and they tend to be reliable on higher time frames such as the hourly chart on up. This makes them a swing trader’s best friend, as they’re simple to Eurobond identify, simple to trade, and simple to measure in terms of risk and reward. Swing trading and day trading have many similarities, but the most marked difference is the frequency of trades.

She means the market must treat a level as support or resistance twice for it to hold any merit. Forex scalping is a method of trading where the trader typically makes multiple trades each day, trying to profit off small price movements. The chart above shows a period where Apple had a strong price move higher.

This just proves that the higher the time frame the more powerful our simple swing trading strategy is. The next part of our simple swing trading strategy is the exit strategy which is based on our favorite swing trading indicator. We at Trading Strategy Guides don’t trade breakouts without determining whether or not there are real buyers/sellers behind the breakout. This brings us to the next step of our simple swing trading strategy. Risk management is the most essential component in a successful swing trading strategy.

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. Each average is connected to the next to create a smooth line which helps to cut out the ‘noise’ on a stock chart. The length used can be applied to any chart interval, from one minute to weekly. SMAs with short lengths react more quickly to price changes than those with longer timeframes. The estimated timeframe for this stock swing trade is approximately one week. It’s important to be aware of the typical timeframe that swing trades unfold over so that you can effectively monitor your trades and maximise the potential for your trades to be profitable.

But to expand on the stop loss rule, we are basically just looking at the previous 3 bars of trading and if today’s close is BELOW the prior 3 day low, then exit the position. By now it’s probably clear that a lot of work goes into creating profitable trading strategies. On the other hand, a 55-year-old with a $1,000,000 trading account probably shouldn’t even have all of that capital in one single strategy let alone risk 1 to 2% of their entire account per trade. There are a lot of common sense principles and rules to apply when thinking about risk management, however, the specific thresholds are going to vary wildly depending on the individual trader. If a 20-day moving average works great, but 18, 19, 21, day moving averages all perform drastically different, be very cautious. Note we have defined anentry, profit-taking, and exit condition.

The risk of loss in trading commodity interests can be substantial. You should therefore carefully consider whether such trading is suitable for you in light of your financial condition. The high degree of leverage that is often obtainable in commodity interest trading can work against you as well as for you. The use of leverage can lead to large losses as well as gains. Optimus Futures, LLC is not affiliated with nor does it endorse any trading system, methodologies, newsletter or other similar service.

Author: Mahmoud Alkudsi

Disclaimer: All information presented on this site regarding real property, for sale, purchase, rental and/or financing is from sources deemed reliable. No warranty or representation is made as to the accuracy thereof and same is submitted subject to errors, omissions, change of price, rentals or other conditions, prior sale, lease or financing or withdrawal without notice. Note: All dimensions and square footage are approximate for the most exact dimensions and square footage please hire your own architect or engineer.