Swing trading is the right choice for you if you have the below qualities

• You will not mind holding your trades for several days.
• You are ready to take fewer trades and will focus on good trade setups.
• You are patient.
• You will remain calm if trade goes against you.
• You will set large stop losses.

Swing Trading is not a right choice for you in case you are one of the above

• You are interested in fast-paced, action-packed trading.
• You are impatient and can’t wait for the trade to run for a day.
• You can’t take it easily when trade go against you

Suppose you have a full time job but enjoy trading too, then swing trading might be a right choice for you. Keep in mind that every trading style has its pros and cons, and it is up to you the trader to choose which one you will be apt for you.

Trading Strategies

We have listed some of the strategies that you can use to identify trading opportunities and manage your trades.

1. Fibonacci retracement

The Fibonacci retracement can be used to help the traders to identify support and resistance levels. Based on this indicator, they can find market reversal opportunities.  Fibonacci ratios of 23.6%, 38.2% and 61.8% are believed to reveal potential reversal levels.

A swing trader may enter a buy trade when the price is in a downward trend and seems to find support at the 61.8% retracement level from its previous high.

Go through our book on Fibonacci and understand Fibonacci in depth.

2. Support and resistance

Support and resistance are critical tools in technical analysis.

A Resistance level represents a price level or area above the current market price where the selling may overcome buying pressure thus breaking the uptrend and making the price to turn back down. Here, a swing trader could enter a sell position on the bounce off the resistance level and place a stop loss above the resistance line.

Support is opposite of resistance. Support is a price level or area on the chart which is below the current market price where buying is strong enough to overcome selling pressure. Hence price stops from falling and price turns raises again. A swing trader would look to enter a buy trade on the bounce off the support line and places a stop loss below the support line.

An important aspect to remember in using Support and Resistance in swing trading is that when price breaches a support or resistance level, they switch roles –Once called a support then becomes a resistance and vice versa.  Acquire full knowledge of Support and Resistance.

3. Channel trading

Channel trading requires you to identify a tradable asset that is displaying a strong trend and which is trading within a channel. Suppose you have plotted a channel around a bullish trend on a chart, you would consider opening a long position when the price rises up from the bottom line of the channel. While using channels to swing-trade, it is very important to trade with the trend, in the above example where the price is in  uptrend, you would only go for buy trades – unless price breaks out of the channel, moving lower and indicating a reversal and the beginning of an downtrend. Learn How to trade the Channel pattern. 

4. Japanese candlesticks

Most of the traders prefer to use the Japanese candlestick charts since they are easier to understand and interpret. Candlesticks can be used to examine price action over any timeframe, from one second up to an entire year. Traders make use of specific candlestick patterns to identify trading opportunities.

After reviewing the popular swing trading strategies, follow the below steps and start swing trading

• Open a live trading account: First open a live trading account to start swing trading. Before opening a live account, we recommend you to open demo account to practice the above swing trading strategies in a risk-free environment.
• Analyze the market technically and fundamentally: Use any of strategies listed above or your preferable strategy to analyse the market technically. Also  analyse the market fundamentally 
• Choose a tradable asset based on your research: Once you have undertaken your research, make a decision on which asset and what time frame you wish to swing trade. Also make a decision on your entry and exit strategy based off your swing trading signal.
• Make use of risk management tools: Make use of Stop loss and take profit order to mitigate the risks involved. These risk management tools will help you to keep your trades consistent and relevant to the trading strategy you use.
• Monitor your position regularly: Monitor your trade which is open. Be aware of gapping and slippage, and changes within the market’s sentiment.
• Exit trade if needed: Suppose the trade has not been exited by your stop loss, close the trade as per your swing trading strategy.