Posts Tagged ‘stocks’

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.