Posts Tagged ‘swing trading strategies’

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.

How to do Proper Swing Trading Money Management

October 24, 2009

Managing your trading funds well is the key to winning at swing trading. If traders don’t manage their trading capital properly, it is not uncommon for traders to increase the size of their trades too quickly. The main goal of this is to increase the speed and rate at which they make a profit. However, traders who adopt this style of poor money management typically end up with nothing but losses and a zero balance in their trading account.

Good money management is based upon the following main points:

Detach yourself emotionally from the money.
Never trade more than you are comfortable with.
Never risk more than you stand to win.

First, you need to remove any kind of emotional attachment to the money you use for trading. Swing trading should be done with money that is set aside and specifically for trading. This isn’t about failure or the worry of failure. It is about being smart. Trading with money that was set aside for other more important needs will only add stress to your trades. Do you really need to make trading any more difficult by worrying about how you will feed your family if you lose next week’s paycheck? Of course not.

Second, always start small. There is no need to rush. The markets will be around for years to come and you should be in no rush. Just how small should you start trading? Anything that you feel comfortable with. While trading, you should be focused on trading and not on how much money you may win or lose. To avoid having this happen, don’t trade with amounts that make you feel stressed or uncomfortable. You may even start trading pennies at the beginning, but that is ok. The important thing is that you are in control of yourself, your emotions and your trading.

Looking for the Best Indicators for Swing Trading?

October 24, 2009

Swing traders could not ask for much more than an indicator that could offer the chance of knowing in advance when the market they were trading was at its breaking point. If you could know in advance when a market was ready to turn, this would greatly increase your chances as a trader of entering into a profitable trade. Luckily, there are indicators already available that can do exactly this. These indicators are known as momentum indicators.

The majority if indicators are known as lagging, but momentum indicators are leading and lead price. Basically, momentum indicators offer an insight into what price may do in the near future. Momentum indicators work on the basis of measuring a currency pair’s level of momentum. As a currency pair begins to slow down and lose speed or momentum, the indicators warn of this and alert traders that a possible retracement in future price movement may be about to happen. Measuring the momentum of a market makes it easier for traders to know where price may go in the near future and manage their trades.

RSI is one of the most popular and widely used momentum indicators. The RSI (relative strength indicator) shows levels of a currency pair that are considered overbought or oversold. When the indicator is in these areas, a trader should be on the lookout for potential price retracement. When a market enters these areas of overbought or oversold, price typically adjusts to the new levels before it continues on. Knowing that an adjustment of price may happen, you are able to close out trades and lock in any profits before price moves against you and wipes out any profits you may have.

If you want to know future price movement in advance, then take a look at momentum indicators, especially the RSI, today. Of all the momentum based indicators, RSI is the most widespread and widely used. You may find that the RSI is just the indicator you need to increase your trading edge.