Best Strategies for Swing Trading

Although Swing trading is attractive for its short term returns with low risk all you need is you will have to master a strategy. Otherwise, your goal set may be unable to reach your niched objectives.

Here is the list of top 5 strategies for swing trading that will give fruitful results when you master it. They can be classified as:

1. Simple Moving Averages
2. Reversal Trading
3. Fibonacci Retracement
4. Trend Trading
5. Breakout Strategy

1. Simple Moving Averages, SMA: 

SMA becomes the best technical tool to select the best option call and option put in the volatility of the stock market of your chosen asset.

SMA provides average price of an asset for a specific period, you can set a relation between current price and the SMA thus, enabling you in deciding the active trades.

The comparison between the current price and the SMA defines the available opportunities. For instance, if the Current Price is greater than the SMA, it is the right movement to enter the long positions. It means that the share market is experiencing a potential uptrend.

If the current price is less than SMA, then you must enter for the short positions and the market is said to experience a downtrend.

Experts suggest you to go for a longer hold as the shorter period length may not produce the accurate results due to sensitive volatility. If you believe in a longer period a fewer false signal may cause delayed signals.

2. Fibonacci Retracement

The Fibonacci Retracement strategy is a popular technical analysis tool derived from the Fibonacci sequence of numbers.

It is utilised to identify the support and resistance levels of an asset price movement in share markets.

How Fibonacci Works?

1. You must identify the upward/downward trend of a stock price movement.
2. Depending upon the movement, you must apply Fibonacci retracement, and they represent the support level and resistance level at the points wherein the asset price takes a reverse direction.
3. Technically, experts explain the Fibonacci retracement levels to be at 38.2%, 50% and 61.8%.

3. Trend Trading: 

You can make profit on trades provided you enter the direction of the trend.

For your chosen asset price, you must apply moving averages, or trendlines for the identification of trend movements be it upwards, or downwards, or sideways.

If an asset is experiencing uptrend, then you must prefer to enter long positions to buy on pullbacks or breakouts. On the other hand, if an asset is experiencing downtrend, you should make a short position entry.

4. Reversal trading:

It sounds typical but yes, it is true, you can strategize to make profit from the reversal that means you should enter trading patterns that move in a direction opposite to the previously held trend.

You can identify such potential reversal trends by using indicators, support and resistance levels, etc.

For instance, you have observed a downtrend in your asset and suddenly you find a reversal thus making the chart appear bullish, or break above a resistance level. And, if you are eagerly waiting to utilise the reversal trading strategy then you must knock the opportunity and enter into long positions.

A converse to the above said can occur, an asset with an upward trend may show a reversal and enter into the or break below the support level. You should immediately jump into short positions and never let the opportunity miss out.

5. Breakout strategy:

You can adopt trading based on breakouts that are very well applicable to swing trading. And, here too for your chosen assets, you need to identify the potential breakout in the price movement.

You must identify the potential breakout by using chart pattern, support & resistance, and trend line

After identifying the breakout, you must enter the direction of it and conduct your trade activities and make a considerable amount of profit.

In a candlestick chart, if you draw a support and resistance levels for your asset then the movement you find signs of breaking above the resistance level, you must immediately enter long positions by making no delay. Likewise, if you find a sign of breaking below the support line then the trader should grab the opportunity and enter short positions.