In addition, it’s advised to understand simple moving averages and trading channels to properly set up your early trades. Swing traders will use tools like moving averages overlaid on daily or weekly candlestick charts, momentum indicators, price range tools, and measures of market sentiment. Swing traders are also on the lookout for technical patterns like the head-and-shoulders and cup-and-handle.


In order to calculate your risk as explained in the next step, you must have a stop loss level defined. Most traders feel like they need to find a setup each time they sit down in front of their computer. By doing this, we can profit as the market swings upward and continues the current rally. If the market is in an uptrend, you want to begin watching for buy signals from key support. This tells you whether the market is in an uptrend, a downtrend or range-bound.


Day traders often need to be able to remain calm and stay focused on their screens for hours each day, which is less important for swing trading as the process happens at a slower pace. Emotion tends to be the number one reason traders fail at trade execution. It holds traders back from exiting their trades at the necessary moments, but developing a proper strategy and following rules are a great way to eliminate the emotion of trading. For example, you buy when the 5-hour moving average crosses above the 20-hour moving average.

Looking for swing trading candidates

I’ll get into some of the pros and cons of both, but first let’s take a look a simple 6-step process for swing trading. On the opposite end of the spectrum from swing trading we have day trading. As the name implies, swing trading is an attempt to profit from the swings in the market. Both are considered day traders, but their strategies are different.

After more than a decade of, I found swing trades to be the most profitable. Although the chart above has no bullish or bearish momentum, it can still generate lucrative swing trades. At this point, you should be on the daily time frame and have all relevant support and resistance areas marked.

The reason why we take profit here is quite easy to understand. We want to book the profits at the early sign the market is ready to roll over. By the way, after the 1929 stock market crash, Livermore reportedly made $100 million, which if it’s adjusted to inflation is estimated to be about $1.39 billion today. Reversals are sometimes hard to predict and to tell apart from short-term pullbacks. While a reversal denotes a change in trend, a pullback is a shorter-term “mini reversal” within an existing trend. For example, in an uptrend, you aim to buy at “swing lows.” And conversely, sell at “swing highs” to take advantage of temporary countertrends.

Swing traders can decide the most appropriate time for their entry and exit strategies for swing trading stocks. We’ve seen estimations that as many as 90% of swing traders fail to make money in the stock market – meaning they either break even or lose money. That suggests that the average swing trading success rate is somewhere around 10% – meaning 10% of swing traders actually bring in profit over the course of a year. Keep in mind that the vast majority of traders treat it more like gambling. They don’t actually use software to help them make emotionless decisions, they don’t follow sound strategies or principles, and they don’t have the right mindset.

How does swing trading work?

A beginning is better advised to take profits after the channel line has been hit as it’s important to learn to take profits in accordance with one’s trading plan. After entering a swing trade, place a protective stop reasonably close to your entry point. Stops and money management are essential for your survival and success. Day trading might sound like a fun way to make a living, but it’s a hard game for new traders to break into.

technical analysis

The exponential moving average is a variation of the SMA that places more emphasis on the latest data points. The EMA gives traders clear trend signals and entry and exit points faster than a simple moving average. The EMA crossover can be used in swing trading to time entry and exit points. Successful swing traders have to be nimble with their convictions — a stock with accumulating volume ahead of earnings might be one to sell short instead of buy.

Best Swing Trading Strategies That Work | (With Backtests, Examples & High Probability!)

Swing trading Forex is what allowed me to start Daily Price Action in 2014. Without using this style of trading, there is no way I’d have the time to maintain this website. Now that you have the stop loss placement identified, it’s time to determine the profit target.

step by step

Considering the thousands of trading strategies in the world, the answers to these questions are difficult to pin down. Anyone with a small investment can trade using ST and make good profits, while scalpers need higher investment to make reasonable profits. Stock TradingStock trading refers to buying and selling shares of an entity listed on a stock exchange. Let’s discuss some swing trading examples to understand the topic better. Price ChangePrice change in finance is the difference between the initial and final values of an asset, security, or commodity over a particular trading period. Netflix was one of those companies that took great advantage of the COVID-19 pandemics.

In other words, there are many different ways to day trade just as there are many ways to swing trade. It is used to identify whether a security’s price is in the oversold or overbought zone in the chart. In normal conventions, if the securities price goes above the level of 70, it is in the overbought zone; otherwise, if the security price is below 30, it is in the oversold zone. The benefits of swing trading include more efficient use of capital and higher returns.

The next part of our simple swing trading strategy is the exit strategy which is based on our favorite swing trading indicator. The first element of any swing strategy that works is an entry filter. For our entry filter, we’re going to use one of our favorite swing trading indicators aka the Bollinger Bands.

What is Forex Swing Trading?

Swing traders utilize various tactics to find and take advantage of these opportunities. Moving average convergence/divergence is a momentum indicator that shows the relationship between two moving averages of a security’s price. The first key to successful swing trading is picking the right stocks which are often volatile and liquid.

Information contained on this website is general in nature and has been prepared without any consideration of customers’ investment objectives, financial situations or needs. Customers should consider the appropriateness of the information having regard to their personal circumstances before making any investment decisions. Moomoo is a financial information and trading app offered by Moomoo Technologies Inc. I would work just with forex because the indices have too strong fluctuations and the commodities are explicitly dangerous, mostly the oil which is conditioned every day by news. Below is a EUR/USD chart with a Relative Strength Index positioned directly beneath it.

What are the best Indicators Combination to use for swing trading? (Best Combination, alert and signal)

There are a variety of methodologies to capitalize on market swings. Some traders prefer to trade after the market has confirmed a change of direction and trade with the developing momentum. Both approaches can be profitable if implemented with skill and discipline over time. Most Forex swing trades last anywhere from a few days to a few weeks. This means holding positions overnight and sometimes over the weekend.

Get tips and updates on swing trading every week in IBD’s Swing Trading column. Leverage trading is not for everyone, and consider your risk appetite prior to leveraging. However, if you are confident in continual appreciation of the markets, you may be able to multiply your position through leverage. Swing trading is contingent on market conditions, though there are different trades for every market type. Swing trading sits in the middle of the continuum between day trading to trend trading. Samantha Silberstein is a Certified Financial Planner, FINRA Series 7 and 63 licensed holder, State of California life, accident, and health insurance licensed agent, and CFA.