Swing trading

Welcome to my “Swing trading.”

What is swing trading? What is the basis of this style of trade and what advantages or disadvantages does it have with respect to other trade styles? In modern stock trading, the concept of "swing trading" is fashionable, but by no means young, since the swing trading technique was first described in the 50s of the last century by J. Douglas Taylor in his book "The Taylor Trading Technique" as a strategy aimed at income from natural 3-5 day market cycles. But each technique has its own peculiarities, which it is worth to tell the reader that there is a correct idea of this style of trade.https://www.blogger.com

The very word "swing" (translated from English) has several meanings, one of them: "swing", "swing", "turn". In the professional jargon of traders, the swing is the amount of time that a position for buying or selling a volatile stock remains open. Swing-trading is often taken as a special, you can say a specific type of trade, based on a fundamental analysis, where positions are held open for more than one day. In general, this is so, because most fundamental news has an effect on the market, and it is logical to think that fundamental traders practice swing trading. But this is only part of the truth. In fact, swing trading is a much more interesting and complex process. It will be more correct to define swing-trading as a phenomenon lying between intra-day trading and medium-term trade, which is based on cyclical price dynamics. 

In the era of global liquidity of the market, a swing trader can find excellent opportunities for transactions in a wide range of time frames.

The main principle of trading on fluctuations is when the market is in the lateral price range or in a state of an upward or downward trend. The trader is given the task of identifying the levels of resistance and support that represent the boundaries of the trend channel or the area of the lateral range. When the market price approaches the border of the resistance or support area, the trader should open the position: short - if the price approaches the resistance boundary; long - if the price suits the level of support. Consider the following example:

In this example, you see an uptrend and the highlighted support and resistance levels with red lines. In the area marked with a green rectangle, the trader needs to look for places to open a position to buy. For a more accurate entry, you can use a smaller TF, which will reduce risks and increase your potential profit. It should be understood that swing trading in a clearly bullish or bear market differs from trading. when the trends are not so pronounced. In an upward or downstream market, prices will move in one direction for quite a long time. In this case, the swing trader will have to wait a long time for the right moment to cover his position, and he will inevitably have to become a long-term investor. While in an unexpressed trend, i.e. at lateral movement, the price will constantly move in different directions, giving swing traders plenty of opportunities to enter the market. Swing traders try to fix profits as close as possible to the upper or lower border of the channel of the upward or downward trend, respectively. In the conditions of a strong trend, you can wait until the price reaches its channel boundary, in a weaker market it is desirable to close deals before the price touches it, so as not to miss the turnaround time.

One of the main advantages of swing trading is that a trader has the opportunity to earn money in the market, so it does not depend on the direction of the market. However, it is also important to know the "right trade", to see the profit potential and to look for the "right trend". Proper trading assumes that the trader is aware of what needs to be done at the current time: sell first or buy, hold a position or cover it. Transactions should be based on key points - extremes, the strength of which is significant. The movement of the market between these points determines the "right trend". Another important advantage is that this style is not associated with high energy costs and emotional stress, and unlike scalping and intraday strategies, this style can bring significant profits to traders. From the shortcomings of this style, in my opinion, there are several factors: first - trade is conducted at larger time intervals, in contrast to intra-day trading, so a larger initial deposit is required; the second - it is necessary to have enough experience to correctly determine at what phase of the cycle the market is located, is because on this basis, the trader calculates potential profit and risks when opening a position Summing up, we can say the following. There are various techniques of such an interesting trading style as swing trading. I did not begin to write down each of these techniques, about the toolsets of each of them and about the approaches to trade management, but I tried to outline this style of trade in general terms. You can also add that there are many ways to succeed as a swing trader, but they all require a fair amount of patience, discipline and time to study them.