The Essentials of Swing Trading
BrokerToolsHub Team
The Essentials of Swing Trading
Swing trading is a style of trading that attempts to capture short- to medium-term gains in an asset over a period of a few days to several weeks. Swing traders primarily use technical analysis to look for trading opportunities.
Identifying "Swings"
Swing traders look for multi-day chart patterns. The goal is to identify the end of a price "swing" and enter a trade when the momentum is about to reverse.
A swing high is a peak reached by price before pulling back down.
A swing low is a trough reached by price before bouncing back up.
Swing traders aim to buy at or near a swing low and sell at or near a swing high.
Common Swing Trading Indicators
Support and Resistance Levels : These are the most basic and powerful tools. A swing trader might look to go long when the price bounces off a strong support level.
Moving Averages (MAs) : Can act as dynamic support or resistance. A common strategy is to buy when the price pulls back to and respects a rising 50-day moving average.
Oscillators (RSI, Stochastic) : These indicators help identify "overbought" or "oversold" conditions, which can often precede a price reversal or "swing." An RSI reading above 70 is often considered overbought (potential sell signal), while a reading below 30 is considered oversold (potential buy signal).
Entry and Exit
Entry : A swing trader doesn't just trade based on an indicator. They wait for price action to confirm their idea. For example, after the price hits a support level and the RSI is oversold, they might wait for a bullish candlestick pattern (like a Hammer or Bullish Engulfing) to form before entering a long trade.
Exit : The stop-loss is typically placed just below the swing low for a long trade, or just above the swing high for a short trade. The take-profit target is often set at the next major level of resistance or support.
Swing trading is a style of trading that attempts to capture short- to medium-term gains in an asset over a period of a few days to several weeks. Swing traders primarily use technical analysis to look for trading opportunities.
Identifying "Swings"
Swing traders look for multi-day chart patterns. The goal is to identify the end of a price "swing" and enter a trade when the momentum is about to reverse.
A swing high is a peak reached by price before pulling back down.
A swing low is a trough reached by price before bouncing back up.
Swing traders aim to buy at or near a swing low and sell at or near a swing high.
Common Swing Trading Indicators
Support and Resistance Levels : These are the most basic and powerful tools. A swing trader might look to go long when the price bounces off a strong support level.
Moving Averages (MAs) : Can act as dynamic support or resistance. A common strategy is to buy when the price pulls back to and respects a rising 50-day moving average.
Oscillators (RSI, Stochastic) : These indicators help identify "overbought" or "oversold" conditions, which can often precede a price reversal or "swing." An RSI reading above 70 is often considered overbought (potential sell signal), while a reading below 30 is considered oversold (potential buy signal).
Entry and Exit
Entry : A swing trader doesn't just trade based on an indicator. They wait for price action to confirm their idea. For example, after the price hits a support level and the RSI is oversold, they might wait for a bullish candlestick pattern (like a Hammer or Bullish Engulfing) to form before entering a long trade.
Exit : The stop-loss is typically placed just below the swing low for a long trade, or just above the swing high for a short trade. The take-profit target is often set at the next major level of resistance or support.
Pre-Trade Checklist
Tags
swing trading
medium-term
support and resistance
rsi
macd
price action
