Swing trading is a term used when trading stocks and options. Its position typically last for two to six days. Day trading lasts less than one day. The main goal of the swing trading is to identify the trends. Technical analysis helps the traders to take advantage of the current trend. Both day and swing trading have risk factors regarding investment and commission. A swing trader has momentum slower than day trader but faster as compare to long term investor.
Swing trading: strategies
The trading strategies depends upon
- Volatility risk management
- High volumes
- Market timings.
The main objective is to identify the market trend and to capture the gain on high momentum. Swing traders can follow these strategies and rules to become the successful trader in the market.
It is important to follow the price action and do thetechnical analysis before investment. The analysis helps to decide which stock or exchange-traded fund to trade.
Working according to trend
The successful swing traders work according to the market trends. For example, in abullmarket, they use bull trend bar while in a downward market they use bear trend bar.
Working against trend
Most traders work according to the current trend of thestock market but sometimes traders go against the original trend and follow new technique which is against the ongoing stock strategy. This is known as fading.
T-line trading strategy
It is flexible and reliable investment technique which is helpful for swing traders. It is helpful in all time frames. The T-line can work in 15, 30 and 60-minute charts. If the stock closes above the T-line then there is the chance the price will continue to rise.
Many traders consider stick chart easy to understand as compare to bar charts. These charts help the trader in identifying the buying and selling pressure. This helps the trader to invest according to the information present on charts. The right investment leads to the successful outcome.
Volume spike strategy
It is one of the oldest trading strategies. It is the technique of assessing the ongoing trend according to the volume activity. It is the simple method to judge the buying and selling activities of a stock at key levels.
Multiple time frame analysis
In this technique, the trader can compare the charts. For example, in swing trading, the trader can use weekly charts to define primary trend and he can define short term trend by using 6o minutes chart.
The traders use the main time frame and then choose a time frame to compliment withthe main time frame for better results.