Simple swing trading strategy that work
There are four types of trading styles in forex, scalping, day trading or intraday trading, swing trading, and position trading. In this article, we will exclude the other three trading styles. And will focus on swing trading to learn simple swing trading strategies that work.
Choosing a trading style actually depends on each trader itself, but in general, that swing trading is a more fun style and some traders say this is the best trading style.
The definition of swing trading in Forex is to open a position and then hold that position for several days or up to several weeks. The target of swing trading is to catch a big trend in the medium term. With expectation, to get a profit of up to hundreds of pips in one order.
For this, you must read this article thoroughly to learn the simple swing strategy that works.
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What is a swing trading strategy
A swing trading strategy is a simple strategy. Where we will use the medium term to open new orders to close the order. Usually, the swing trader will let the position float for several days or weeks. Swing trading will identify market trends and open positions.
The name Swing trading itself comes from the fact that traders will look for conditions where prices tend to swing up or down. In this case, the trader can use various technical indicators or take advantage of support and resistance.
One thing unique to swing trading is that it combines several components of daily trading, with the speed of trading positions. The swing indicator is to analyze the swing movement between 3 to 15 swings.
By analyzing the time period the trader can determine whether the price is in the swing support or resistance or not yet. If the price has entered the next support and resistance is to identify a bearish or bullish trend and look for a trend reversal.
Traders call this a pullback or counter-trend.
If it is clear and convincing that there is a pullback, then it’s time to open a new order. This aims to get the direction of the trend where the beginning of the trend begins to form to get the next swing.
This swing trading strategy has brought Jesse Livermore to his wealthy. Are you interested in becoming rich like Jesse Livermore, see through this article?
Basic Swing trading how it works
Swing trading how it works is simple where this trading method will try to catch one swing of movement from top to bottom. This is a way of trading by holding orders for several days until there is an opposite pressure starting to crash the market as a sign that the swing has weakened. If it’s too late to exit then it will erase your profit.
Illustration of simple swing trading as shown below.
It would be a good opportunity if we find the lower and upper points of the swing so we can determine the right position for the next swing. The illustration above gives us four times the opportunity to buy and sell if it can determine properly.
Simple swing trading usability
There are several uses for using a simple swing trading strategy, the first is that it can provide a higher potential return than the risk.
The second use of a simple swing trading strategy is to eliminate a lot of intraday noise. You will be able to trade like smart money, which is in a big swing wave.
The third use of a simple swing trading strategy is that we can use only technical indicators. Technical indicators can help you trade better in terms of accuracy. Maybe some traders also look at fundamental indicators, but this simple swing trading strategy does not require this method.
The fourth use is to use a simple swing trading strategy You don’t need to monitor on the screen all day long like with a daily trading strategy or scalping. And the important thing is that this simple swing trading strategy can be used for forex, stock trading, and crypto trading.
But this strategy is like the others, there are also some risks that can occur. The risk of gaps may occur because this strategy takes several days or even weeks.
Another risk of simple swing trading is that if a sudden trend reversal can make a loss position. Because you don’t always monitor the market every day it’s easy to let your guard down if price trends don’t go according to plan.
So it is recommended to use stop-loss as anticipation of possible risks, and also you can modify stop loss in profit if possible to lock in profits.
Indicator for simple swing trading strategy
Only one indicator you need to use the simple swing trading strategy, that is the Bollinger band. This indicator is the design of John Bollinger can be used to analyze overbought and oversold. But also to measure price volatility.
But it would be better if you understand the candlestick pattern so that you can also recognize reversal patterns, and or continuation trends.
Some trader swings watching another important technical tool like as:
- Head Shoulder Pattern.
- Flag Pattern.
- Cup and Handle Patterns.
- Moving Average Crossover.
- Triangle Trading Pattern is a consolidation pattern that is marked by a higher low and a stable high. and vice versa.
Consolidation usually occurs before the main trend swings. To deepen the introduction of price action patterns, studying them will provide a better strategy.
Back to the main indicator. The Bollinger band swing trading indicator consists of 3 moving averages:
- Middle moving average, which is a simple moving average. It’s called Middle band
- Two other simple moving average lines are plotted two other moving averages at a distance of 2 standard deviations from the center moving average. The top line is the Upper band and the bottom line is the Lower band.
The picture above is the appearance of Bollinger band indicators with standard settings using open-close data. Maybe you are interested in getting to know more about this Bollinger band indicator, please learn the basics first.
Why do we use standard settings because based on this experience gives a meaningful signal? I tried setting some inputs, but it didn’t give satisfaction and finally returned to the default settings.
Next, we will go in a more important direction, which is about trading rules, for this you may write on a piece of paper as a reminder. This exercise will improve your learning curve and you will become a swing trader in no time.
Simple swing trading strategy rules
Basically this strategy only relies on two main elements. Namely, the Bollinger band indicator functions as an entry filter.
While the second element is to use trading methods based on price action. The simple rules of swing trading strategy are as follows.
- Step 1: Wait for the price to reach the upper Band. Using the Upper band as the basis of the analysis is to find out the price has entered the overbought area. Every simple swing trading strategy that works must understand this element.
Please note that when the price is in the upper band line it does not mean that it has entered overbought, you should see the reversal candle pattern first. The recommended time frame is H4.
- Step 2: Wait for the price to Break below Middle Bollinger Bands. After the price touches the upper band confirms that the price is in overbought territory and the market will reversal. Price a break below the middle Bollinger Bands is a clear signal in shifting market sentiment.
- Step 3. Breakout Candle requires a Big Bold candle that closes near the Low Range Candlestick. Take a sell action near Breakout Candle. The swing trading indicator so far has provided the accuracy of this sales signal correctly.
But for entry using candlestick-based methods to trigger our entries. This triggers by looking a big bearish candle that breaks below the middle Bollinger Band. It’s worth noting that we need a breakout close candle near the low range of the candlestick. This signifies a strong seller, which can really push this currency pair lower.
- Step 4: Modify the Stop Loss for protection above the Breakout Candle. Breakout candle is an assumption that this will be a real change in increasing seller volume. And if finally the high of this candle is broken by the price. This means it’s only a temporary increase and the order has been protected by a stop loss.
- Step 5: take profit if the price breaks and closes above the middle Bollinger Bands. In a short swing, this case can occur after the price finally drops. It can bounce back to the lower band and then break the middle band. This will be worrying if there is a trend reversal. So take profit is carried out at prices that bounce off the lower band and break middle bands. The reason for taking profit here is to record profit when a swing reversal is possible in the short term.
The rules of the steps above are for Sell entries, if applying to Buy rules you only need to reverse the method of analysis. Find the oversold area and take the next step.
Another simple swing trading strategy
There is another one for a simple swing trading strategy that works. If something can be done in a simple way why should we look for a complicated way? Meaningful quotes from an Albert Einstein is that everything should be made simple but not that simpler.
Simple swing strategy stuck in the box
This strategy is also very simple by looking for price patterns that form like a box. Where the top point is resistance and the bottom point is support.
The trading rules are also simple.
- Step 1: find price patterns in the range that formed squares or rectangles.
- Step 2: wait for the price to break support and wait for the rejection price to be marked with a close price above the support.
- Step 3: if the price rejection is strong where is the open buy, then place the stop loss below the support.
- Step 4: set take profit below the resistance indicated by the top line on the box.
Simple trading strategy Catch the waves
Simple this strategy is to catch one movement in the main trend wave. This is looking for a bouncing point when the continuation of the trend is still very high potential.
This only applies to strong main trends and not all trends can catch this one wave of movement. The simple tool used is the moving average of 50. This indicator line as a price guide will bounce there.
The steps that must be used are as follows.
- Analysis of the main trend is bullish or bearish.
- If the price approaches 50MA, then wait for the price rejection.
- If there is a rejection of the bullish price, then open Buy at the next candle and set the stop loss below the low and take profit right before the high swing.
- Exit point before swing high.
How do you create a simple swing trading strategy?
Find the simplest method and you understand, practice it continuously so that you really understand the strengths and weaknesses of the method.
Is Swing Trading Easy?
Swing trading is a medium-term strategy term in forex, stock, or crypto trading. Swing trading is easy to absorb, but the risks that arise because of dynamic price changes can materially damage your profits.
How much money do you need to become a swing trader?
Swing trading strategies require at least $ 5,000 to $ 10,000 for effective trading methods. You should consider the golden rule of high-risk investment, only spending money that affords to lose.
Can swing trading make you rich?
All trading strategies and styles offer similar profit potential. If you can earn 5% a month with $ 2000 of capital then your income is $ 100. But if your capital is $ 60,000 and your profits are 5% a month your income is $ 3,000.
Who is the richest day trader?
Paul Tudor Jones, he has a net worth of $ 4.5 billion. He is one of the best forex traders ever.
Simple Swing trader strategy that works is one of the best trading strategies that give potential profit to all traders. If you have really mastered it then maybe you will become one of the best traders and equal the wealth of Paul Tudor Jones.
The forex market is a very wild but very large market, without enough experience and knowledge it will be difficult to survive in this arena. Even though you can get rich, pay attention to your capacity here, study, practice, and learn.
Being a trader will always learn to find chances to become opportunities.
Are you ready to start trading?
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