Does the market always seem to move lower after you buy?
You’re frustrated that your target profit was almost reached, but it started falling and hit the stop loss?
If your answer is YES, then read this article till the end.
There are many Swing Trading strategies, but today I'm going to share the simple and easy-to-understand strategies that will help you make profits.
Let's get started.
What is Swing Trading?
Swing Trading is generally a short-term trading strategy for traders keen on making profits in short periods. Swing Trading positions are held for 2 to 10 days on average. But that doesn't mean you have to hold it for 2 or 10 days. You can always close the trade early if you see a good profit.
Swing Trading Basics
If you are new to the market, you have to understand the basics of Swing Trading. Then, you have to pick a strategy and strictly follow the strategy consistently for 21-Days to see the results, whether it is working or not.
It's essential to have your trading plan and do not deviate from the plan. A professional trader always has a trading plan, which he follows strictly to make money in the stock market.
You should properly know where you'll take the entry, where you will put your stop loss, and what's your target.
The return might be smaller, but you can compound into excellent annual returns if done consistently on the strategy.
Swing Trading Strategies for Beginners
Let's begin Swing Trading strategies for beginners.
1. Trade with the trend
The first Swing Trading strategy is to trade with the trend. Now you might be wondering how to trade with the trend.
The trend is the direction of the market. It might be an upward trend, a downward trend, or a sideways trend. To identify trends, you can use various indicators like moving averages, MACD, and RSI.
Always go with the trend, because in India we say "Bhav Bhagwan Che" which means follow the trend do not go against the trend.
There are many reasons why people lose money in trading. One of them is they always trade against the trend. It's a huge mistake to trade against the trend because most of the time, you're likely to win by following the trend.
Moving Average is an indicator to identify the trend of a particular stock. The different types of moving average are simple moving average (SMA), exponential moving average (EMA), weighted moving average (WMA) and smoothed moving average (SMA).
2. Support & Resistance
The support & Resistance strategy is another important Swing Trading strategy for beginners.
Support & Resistance are the two key Swing Trading indicators.
The main objective of Support & Resistance is to determine whether a particular price level will hold or not.
If a particular stock's price is around support level you might experience buying pressure, the stock might stop moving down and enter into an uptrend position. On the other hand, if a particular stock's price moves around resistance level you might experience selling pressure, the stock might enter into an downtrend position.
3. Bollinger bands
The Bollinger bands strategy is one of the Swing Trading strategies used by most of the traders.
The Bollinger bands strategy is to look at the normal band. When you see a particular price range moving around, you can use Bollinger bands to identify whether it is a good time to trade or not.
Bollinger Bands is a trading indicator consists of 3 lines . Two bands are the upper and lower band, while the middle band is a simple moving average.
To make things simple, bollinger bands works like this.
The Bollinger Bands strategy is to look at the normal range of a particular stock. If you see a particular price moving around, you can use Bollinger Bands to determine whether it is a good time to trade or not.
If the price is near the upper Bollinger Band, it's considered as the price of the stock is expensive and you might see a downtrend, whereas if price is near the lower band it is considered as the stock is cheap and you can speculate on a rally.
You will basically see the Bollinger Bands trade in two bands. The good thing about them, they are very easy to understand and helps you determine if your stock is over or under valued.
Frequently Asked Questions
The best strategy for swing trading is catching the trend. You can use Moving Average indicator to find the trade.
You can use daily bars time frame for swing trading. Daily time frame can give you better trade.
Yes, it can be used for swing trading. Combining Bollinger bands with other indicators can give you profitable trades.
You can start with any sort of capital. You can start with INR 10K also.
RSI, Moving Average, MACD, Volume and Bollinger band are the best technical indicators for swing trading. Do not use all the indicator on the chart.
If you keep yourself disciplined to follow the strategy and depend on a particular system, you will be able to make money in the market.
As a newbie, I would suggest you to start trading with any moving average indicator. It's easy for beginners to understand and follow. If you gain confidence, then move to more complex indicators.
Another important thing is trend. You need to trade with the trend and make trend your friend. There are many things which I have not covered in this post because of its length.
Once again, my goal is to help new traders to join stock trading and make profits.