SWING TRADING

Swing trading is another form of trading style that allows for traders to take small to medium size profits. It is usually left for over a few days, weeks or even up to a month to get the profit intended to make.

Swing trading helps to identify the next move of an asset price thereby taking advantage of it and taking a position either long or short, then taking profit if the move turns out to be true. Swing trading mostly materialize with more than one trading session but on rare occasions there are cases where swing trading occurs within a day depending on the volatility of the market.

Swing traders make use of technical analysis to help shed more light on the asset. A swing traders isn't always after a very huge profit. They take profit little by little and when the market turns out to be more volatile they get more profits.

Swing traders tend to use a RISK/REWARD Principle while trading which means if a swing traders places a trade his profit and loss is in a ratio 2:1. Whereby when he place a trade to make profit of $4 he risks making a loss of $2. Little profit equals little loss for a swing trader.

A good Risk/Reward strategy the risk of loss shouldn't be higher than that of profit. $4 shouldn't be risked at the expense of making $2.

As it has been stated that a swing trader places trade for over a long period while studying the chart also he studies the chart of several weeks or days or a month and then back to a 4 hour chart to set a resistance and support level for his trade.

ADVANTAGES OF SWING TRADING

1 It enables a trader to take profit on a trade even if it's in a small ratio unlike day trading where the market might not be favourable for the trader till the end of the session.

2 It is less stressful and less time consuming to study the chart when swing trading.

3 Fundamental analysis is not too essential in swing trading with just technical analysis clarification a trader can place a trade

DISADVANTAGES OF SWING TRADING

1 Sudden change in the market movement in reversal can lead to loss for the trader, especially when the markets goes suddenly volatile.

2 Swing trade tends to deal more on small profits than big profits.

3 There are risk of the overnight trade and weekend trades affecting the trade position of a swing traders.

4 Swap fee is always accumulated for swing traders, this fee is for everyone who holds a position overnight.

Trading plan

The trading plan I will be using is the use of moving average, resistance and support line.

To trade a swing trading, we first have to find out what trend the market is going at the point of entering the trade.

We will study the chart of a month till date.
Then we try to locate all pullbacks on the trade. Pullbacks are the reversal of the candle stick for example when there is a multiple green bar going upward the pull back is the red bar going towards the downward trend. A pullback always have 2 or 3 red bars. Looking at the chart below we can spot a real.pull back

Then we make use of the EMA setting the Length to 50. To trade with this strategy one has to ensure the price is above the EMA line and the resistance and support line is also always above the line.

A rectangle is then as the support line going slightly below the last pullback.
To set a stop loss the last pullback closing price is used as a stop loss, then I set a take profit at my desired price. For my strategy I set take profit in 2 bits named take profit 1 and 2. To master this method one has to ensure one does training with a demo account.

DOGEUSDT REVIEW

This is a chart of Dogeusdt, the last support level was at $0.53073 and the shadow overflow to $0.50656, after setting the EMA length to 50 and locating a site where the price is higher than the EMA.

Then we get a resistance level which is at $0.62648. to place a swing trade for more than a day. The trader will enter the trade at $0.5400 to confirm that the trade will move in his intended directions and then set his stop loss at $0.50656 and a trailing stop loss at $53073.

The trader then set a take profit firstly at the last resistance which is $0.62648. and then can set another take profit at $0.6500 which makes the reward/risk strategy come.to.play. if the trade tend to reverse the trader loss $0.03 but when it goes according to plan the trader makes. If the trader has made the trade as seen on the chart the trader would have been in profits.

Here is another chart, which is for the month of April. In this chart a pullback was noticed and a support line was drawn. It's support line was at $0.31250 with and over shadow of $0.30726. the distance line was at $0.35207. which shows that the stop loss would be set at $0.30700 and a take profit at the resistance line at $0.35207 and the take profit 2 at $0.3800

Trade management

To reduce ones loss as a swing trader because loss is inevitable not all forecast will be correct. Its ideal to always set ones stop loss a little below the closing price of the previous chart one is intending to enter from and set the take profit at the first resistance line or a little below the resistance line.

The trailing stop should be at a value of the end of the body before the shadow. Also before entry it should be ensured that the bar has moved a bit in the direction of the intended trade.

@yohan2on