Best Indicator for Swing Trading:

Influence of Price & Volumes in Swings:

Being a short term trading, swing trades can reap you good returns and your investment that may last from few days to few weeks.

Before you make an investment, you will have to understand the volatility, price variations, and volumes of stock movement in the trading sessions.

As your swing trades mainly depend on the price and volume of the stocks you need to thoroughly understand several aspects of the buying/selling on charts, check to proceed when a stock is overbought or oversold.

If you are intending to buy a stock then you need to know the strength, trend and the level of interest of the investors in stock activity day in day out.

Some of the technical indicators help you address entering/exiting of the stocks in your short term swing trades.

Moving Averages:

It defines the direction, strength, and volume trends that is an indication to the investors who pay interest in the stock activity in the markets.

Relative strength index (RSI):

You can keep a measure of a stock whether it is overbought or oversold and its momentum.

Stochastic Oscillator:

You can understand the current price position of a stock in respect to its previous high or low.

Support and Resistance:

Due to volatility, the price fluctuations of a stock can be aggressive or sublime.

The graphical representation of a support and resistance in a timeframe relates to two different levels.

support reflects the bounce of a price and resistance shows the break in the rising price trend.

Average True Range (ATR)

As you are aware of, in stock market terminology, volatility is the measure of the price variation of stocks from its mean value.

When you trade in stock markets, you cannot take an advantage over the big stock movements.

However, to obtain the right price of stock, you must be able to measure the volatility of the stock by calculating average true range, ATR.

Average Directional Index (ADX)

Average Directional Index, ADX, is used to identify the trend direction and the stock’s strength. The indicator represents three components, +D1, -D1, and ADX line.

D1 indicates the positive direction, -D1 is an indication of negative direction, and the ADX line does identify the trend strength.

Williams’ %R

Willians’ %R measures oversold, or overbought positions, and the scale is indicated in the upside-down. It is represented in negative values.

In the graph, if the reading shows -20 or more, then the stock is concluded to be in the overbought zone, and it is ready for a dip. Similarly, when the indicator descends to -80 or less, the stock is said to have experienced an oversold zone.

Commodity Channel Index (CCI)

Commodity Channel Index, CCI, which is used for commodity trading is also applicable for the stocks. It is an indicator that represents the different share prices around its statistical mean of a stock.

If the CCI value is low then it means the stock price on trade is below its average price, and for a CCI with a high value, it means the stock price is much higher than its average stock price.

CCI charts variates in a range of +100 to -100. If the stock goes beyond +100 it means the stock is overbought and when it is far below -100, the stock has been overbought.

For stocks that have crossed +100 or -100 will require corrections otherwise it is said to be pending.