Swing trading


If you seriously want to learn how to enter any trade with the risk being at its lowest, while managing according to the markets’ ensuing behavior, then you have ended at the right place. Whatever information bit that we have last received from the market, is what we have to act upon and it is what our future decisions have to be made upon.

Every trader will be interested to know if the market is making a higher low or is it going lower low? If you are a trader, you will also be interested in knowing that how much higher or lower is the next low. Well in simple words, the distance between two points is what indicates your degree trend. Another question that would interest you would be what length was the last swing? Remember that the short swing precedes reversal while longer swings symbolize entrance into retracements.

Keep in mind that the rules in trade remain static, irrespective of period. One of the best rules on volume and open interest confirms the swing while decreasing volume is the turnaround. Well, swing trading is considered to be following a credible course of action and above all glue to the basic rules. The first aim is to trade on test of previous highs and lows. You are suggested to exit in case of buying lower low. In this case, you will hardly find a confirmed support. If you were selling a higher high in uptrend, it would be better if you buy the retracement.

Another golden piece of suggestion for you is that, if the market does not behave on the expected pattern, you should immediately exit it. You must analyze and define the risk by the last swing point. It is always better if you define the risk before entering the market. Make sure that the position you chose or your average is not what may be losing position. Also, keep in mind that the downtrend swing becomes the reason of faster and sharper uptrend swings. If you feel that the market loses its swings or are smaller, do not trade.

Guideline for analyzing:

  • The market flows in one direction only, for one day
  • Reversals are mostly made in morning and less in afternoon
  • Lower closes means lower prices, most of the time
  • The afternoon pattern is more likely to be influential on the next day as well (exceptions are still there)
  • Prices are more likely to reveres after 2-3 days.
  • Larger market gaps lead to greater odds

The market is dynamic in nature, which cannot be predictable in the long term because there are number of variables involved in it. Market follows a complex system which has the characteristics of being dynamic, having critical levels and at the same time it involves a certain level of noise, which is often classified as negative feedback. Positive feedback on the other hand side, is a condition in which short, intermediate and long term cycles become powerful reinforcing loops and thus, creating a positive gain at each stage.