Three Simple Swing Trading Strategies That Work
In this post, I will show you three simple swing trading strategies that work. First, you must understand what swing trading is and how it works. The whole concept of swing trading is to capture one significant move, one big swing, and exit your trades before the market reverses and wipes out your profits.
Here’s an example of a swing trade. Let’s say you see the price at a support level, so you decide to enter a buy at this support level. Remember, as swing traders, our goal is to catch one big swing. You catch this huge swing all the way up to the resistance level, close your trade, and that is one swing trade. Basically, you entered for a buy at the support level and exited the trade when the price reached a level where sellers are likely to be present. This way, you capture one swing move. Similarly, if you enter for a sell at resistance, your take profit will be all the way down at the support level. That is one swing trade.
Catch the Wave
The first swing trading strategy is to “Catch the Wave.” Remember, our goal is to catch one move in the overall trending market. The idea of this strategy is to enter trades after the retracement has ended and continue to trade with the trend. However, this does not work on all types of trends. You want to swing trade those trends that have deeper pullbacks or retracements because there’s more potential for profit.
In this strategy, we’ll be using the 50 moving average. As you can see, this beautiful blue line right here is your 50 moving average. We want to see the price pulling back to this 50 moving average before we enter the trade.
The first step is to identify a trend that respects the 50 moving average. In this scenario, we can see that the price is in a downtrend because it is creating lower highs and lower lows. Since the price is in a downtrend, we should be looking to sell, but we do not want to sell randomly. You want to be precise, like a sniper, on where you enter the trade.
Wait for the price to pull back to the moving average. When the price pulls back to the moving average, do not enter for a sell yet. Let me repeat myself: do not enter for a sell immediately when the price pulls back to the moving average. Instead, wait for a bearish price rejection. Look for signs that the price is rejecting the moving average and is likely to head back down. Then, you can enter for a sell.
For example, if the price has been pushing down and then pulls back up to the 50 moving average, wait for confirmation. If the price gives a bearish price rejection, such as a doji followed by a large red candlestick rejecting the moving average, you can enter for a sell position. Place your stop loss above the most recent swing high and your take profit at the most recent swing low.
Fake the Move
The second swing trading strategy is “Fake the Move.” This strategy involves trading against the trend or momentum. Yes, I usually advise trading with the trend, but this strategy is for those who like to trade against the trend.
The first step is to identify a strong momentum move towards a support level. Once you see the price crashing down to a support level, look for a strong price rejection at this key support level. If the price breaks through the support level but then shows a strong bullish close, indicating a price rejection, you should consider buying. Enter a buy position on the next candlestick, place your stop loss below the support area, and take profit at the next swing high.
Stuck in a Box
The third swing trading strategy is called “Stuck in a Box.” This strategy is used in a consolidation market where the price is moving sideways, stuck between support and resistance like a box. First, identify a ranging market where the price is consolidating. Wait for the price to break below the support level. If the price breaks through the support but then shows a strong price rejection with a large green candlestick, enter a buy position on the next candlestick. Place your stop loss below the candlestick low and take profit at the resistance area.
Similarly, if you want to trade resistance, wait for the price to break through the resistance and show signs of reversal. Enter a sell position, place your stop loss above the resistance, and take profit at the support level.
Conclusion
I’ve done a detailed guide on how to trade each of these strategies, which you can find on my YouTube channel. Check out the video next to learn more about the “Stuck in a Box” strategy. If you enjoyed this video, smash the like button, click the subscribe button, and welcome to the tribe. Remember, you’re just one trade away.
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