But what exactly is a swing? - In the image below you will see several examples of swings in the market. Generally, a trader would like to trade complete swings in one trade. But in most cases this is not possible and wishful thinking, because the right timing is very difficult.
Swing Trading Methods: Focus on highs and lows in the chart
A swing trading strategy always depends on the analysis of the trader. Different methods can be included in the trading style. From my experience, it is recommended to focus on the swing highs and swing lows, because these indicate strong market movements to the trader. What is meant here are movements that look like a "V". The market comes to a certain price and turns around in a short period of time.
These points on the chart can either be connected or or used as reference points. These points are very good for resistance and support lines or false breakouts. It is recommended to focus on the biggest movements.
To determine a trend in the market, the best way is to analyze the swing highs and swing lows. This refers to the "V-shaped" movements in the chart at https://exness-sg.com/metatrader4/. The price initiates a strong tremd reversal. The overall picture then shows an upward or downward trend. The example above illustrates this more clearly. With rising swing highs and lows, a further upward trend is to be expected.
Swing Trading Tips:
- V-movements are evidence of strong market movements
- Look for swings in conjunction with support and resistance
- Also focus on highs and lows which are at the outer end of a range
What time units are used for swing trading?
Swing traders used in most cases the time units 1 hour chart and up. The most popular is the daily chart. This means that a candlestick has an expiration time of 24 hours. In large time units the chart moves extremely slowly and you have enough time to react.
The most popular time units for swing traders are D1 (daily chart), W1 (weekly chart), M1 (monthly chart).
Choosing the right market and financial product
In contrast to scalping and day trading, almost any market is suitable for swing trading. In the other forms of trading, the liquidity of the market plays a very important role. This can be rather neglected for longer-term investments. Trade Forex (currencies), stocks, ETFs, cryptocurrencies and many other markets with a suitable broker (more on this below).
For private swing traders, the best financial product to trade is CFD (contract for difference). CFDs are a contract that is tradable on almost all assets. Contracts for difference are particularly suitable because you only need a small amount of capital and can use leverage. In addition, the fees are very low!
Any asset can be traded in the long term. The advantage of this is, for example, unlike active day trading or scalping, you only need to check the portfolio once a day. I recommend it once in the evening to scan the markets and adjust his portfolio after that.
The advantages of CFDs for swing trading:
- The use of leverage is possible
- Each asset is tradable at small fees
- Small as well as large stakes are possible
- Simple short selling