There are many different trend trading strategies, each using a variety of indicators and price action methods. For all strategies, a stop loss should be used to manage risk. For an uptrend, a stop loss is placed below a swing low that occurred prior to entry, or below another support level. For a downtrend and a short position, a…
Trend trading strategies assume that a security will continue to move in the same direction as it is currently trending. Such strategies often contain a take-profit or stop-loss provision in order to lock in a profit or avoid big losses if a trend reversal occurs. Trend trading is used by short-, intermediate-, and long-term traders. Traders use both price action and other technical tools…
Trend trading is a trading style that attempts to capture gains through the analysis of an asset’s momentum in a particular direction. When the price is moving in one overall direction, such as up or down, that is called a trend. Trend traders enter into a long position when a security is trending upward. An uptrend is characterized by higher swing…
Swing trading is less risky than other forms of short-term trading. By relying on technical analysis and holding positions for a short period of time, there is a lower risk that you get stuck holding an unliquidated position. With that said, swing traders must properly identify when to enter and exit positions; if read incorrectly,…
Swing trading requires upfront capital to enter into a position. It also heavily relies on charting software and a technical analysis setup. In addition, it’s advised to understand simple moving averages and trading channels to properly set up your early trades.
Simple moving averages (SMAs) provide support and resistance levels, as well as bullish and bearish patterns. Support and resistance levels are often useful information when determining a course of action. Bullish and bearish crossover patterns signal price points where you should enter and exit stocks. The exponential moving average (EMA) is a variation of the SMA that places…
The best swing trading conditions occur when financial markets are trading sideways. When the market is transitioning between bear and bull markets or when the market is facing broad uncertainty, the best positions often present themselves for swing trading. Several items to consider include:
Alternatively, to bear markets, bull market trading may be easier. As prices tend to appreciate during these market conditions, it’s easier to buy a security and experience a profit a short while later. However, there are a few things to keep in mind when swing trading during bullet markets:
Bear market swing trading is among the more difficult for natural buy-and-sell trades. In a downtrend environment, equity market prices are decreasing in the long term. Therefore, it is not advantageous to buy a security and hold it with expectations of price appreciation. There are several strategies to circumnavigate this:
Financial markets typically have three prevailing long-term trends: the bear market, the bull market, or somewhere in between. Swing trading strategy is different under each environment.
