Posts Tagged ‘forex trading’

Do You Know What to Look for in a Swing Trading Strategy?

December 16, 2009

Just what is a good swing trading strategy? Do good swing trading strategies have any features that make them better than others. Are there any key points that a strategy must address to truely be considered good? Swing trading is based on proper trend identification and using market rallies and market pullbacks to enter.

The best swing traders are ones that identify the trend and then only trade in the same direction as the trend. Why is the trend so important? It is said that the smart money typically follows the trend and if you follow the smart money you stand a good chance of winning. This makes sense then that the most reliable trading strategy is one that goes with the trend. This greatly increases your chances of making a profit and being successful in the long run.

Swing trading strategies make the most of rallies and pullbacks. Swing traders do not just enter haphazardly in the market, swing traders are looking for an opportunity to get into the market. By first waiting for rallies or pullbacks, they can then get into the market at a better price. Why is this even important? Getting into the market at a good price means you stand to profit more as price should continue on from the point you entered.

A good swing trading strategy is one that is based around trend trading and entering the market at a time where you stand to get a good price. Swing traders manage to do this by waiting for price to retrace before it continues on with the main trend.


Psychology for Swing Trading

November 14, 2009

You may not have thought of it before but the hardest thing about trading is the psychology of it. Sadly, most traders completely ignore psychology and never give it the attention it deserves. Psychology plays such an important role in swing trading that it is the key to trading success.

Psychology here is all about how you manage yourself when trading. Trading induces a wide variety of emotions and reactions in people, more so when a trade they have just placed begins to make a large profit or loss. Many people lose control when it comes to trading and the thought of how much money they might possibly earn clouds their judgement.

Why would anyone neglect the side of psychology if it really is the key to being successful? Simply because people are scared that what they uncover about themselves will cause them more pain than good. This is the same kind of fear that ruins a good trade.

If you succeed at swing trading or not depends on you as a trader. Are you mentally prepared to win or lose? Changing your thinking is crucial to being successful in trading.

Can Swing Trading Be Used On Any Market?

September 30, 2009

Swing trading offers a trader the chance to reap massive returns but without the usual high levels of risk you may find in other styles of trading. It is possible to swing trade any market. However, there are two factors a market must posses to allow you to swing trade with maximum potential.

First, swing trading requires a market that is known to trend more than going sideways. Some markets are seemingly randomless and offer no explanation as to why they move like they do. Swing traders need a stock that trends or typical trends more than it moves sideways. A market that trends allows a swing trader to take pieces of the market as price swings up and down.

Secondly, volatile markets are not suitable for swing trading. Volatile stocks, while offering the potential of a good income if you happen to be on the right side of the trade, make it difficult to swing trade. Swing trading takes time and as a result if a stock moves too fast or too abruptly in any one direction, it does not give you time to plan your entry and exit. The best kind of stock is one that is widely and heavily traded.

Anyone can swing trade stock as long as they first make sure that it is one that tends to trend more than it moves sideways and that it does not move abruptly or erratically without explanation. Keeping this in mind will help you to gain an edge over other traders and be profitable at swing trading.

Why Everyone Should Be Swing Trading

September 30, 2009

There are many different ways you can trade a market, regardless if you prefer stocks over FOREX or options over futures. Trading by its very nature is risky, you should consider spending sometime examining the styles of trading and discover which one is the best. Use swing trading to gain a true advantage over the market and other players.

Swing trading is the best form of trading for two reasons. The first being that you do not need to be glued to your monitor 24 hours a day watching and waiting for a suitable trade setup. Many people become obsessed with trading and watch their charts day in and day out. For the majority of traders, this results usually in a loss of time and a loss of money. There is no need to wait in front of your monitor all day just to place a trade. The benefit of swing trading is the freedom that it gives you away from the computer. Entering and exiting trades doesn’t mean you must be near your computer all day.

In addition to trading freedom, swing trading is extremely low risk. Swing traders see the big picture. They usually observe markets from the higher timeframes and can see major trends much more clearly. Trading low level timeframes is difficult as the trends come and go much faster. Such trends can be difficult to trade because they are so short. Swing traders can identify and trade in the direction of major trends which can last days, weeks, months or even years. By being able to trade in the direction of these major trends, returns on your investment are increased greatly while the chance of a loss is reduced significantly.

Each person has their own style of trading, but if you are looking to gain an edge over the markets, no matter the market you trade, then swing trading should be something you look at. Swing traders usually follow the smart money thanks to their preference of trading higher timeframes and only trading in the direction of the trend.

Just What is Swing Trading All About?

September 30, 2009

Are you curious about swing trading? Swing traders ride the swings or oscillations that markets make as the stock or currency pair pivots from one price level to another. Swing trading is a style of trading that can be used on any market. The most common methods of trading are day trading, swing trading and trend or buy and hold trading. Swing trading is found in between day trading and buy and hold trading and is highly recommended, for any kind of market. Let’s take a look at the other styles.

Day traders typically keep their trades confined to a single trading day, hence the name. Scalping is also considered a day trading style of trading. Scalping typically involves high risk but in turn offers potentially high profits. The other end of the trading spectrum is where you find buy and hold traders, holding their trades sometimes for many months. Without large trading capital, you will find that the buy and hold trading style can be difficult to profit from.

Swing trading is medium term focused and usually has traders holding trades for several days, but less than a week. Can you hold trades longer than this? Of course, but this is just a general rule of thumb. Some markets are more suitable for swing trading and it is important that you are trading the right currency pair or stock. Many traders swing trade because it is the only style to offer high rewards with the lowest levels of risk. This is the perfect balance for trading profitably.

Scalping, while sometimes profitable, usually results in many traders melting down and blowing up their trading capital. Only swing trading offers high rewards with low risk. This style of trading can be applied to forex, options, futures and many more markets.