Steemit Crypto Academy | Season 2: week 7 - The Swing trading style

Hello

This post is a homework post for professor @yohan2on. It a great lecture by the professor and a great homework task

Swing Trading

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There are mainly 3 types of trading styles : day trading, swing trading, investment.

As the name suggests Swing Trading this is a trading style where traders trade with the swings (like upward swing or downward swing). Swing trading is not as risky as day trading or not as safe as investment.

Swing trade is not like day trades in which you must have to complete your trade within a day. A swing trade may lasts for some days, weeks, months untill your targets are achieved.

As professor said markets moves in zig-zag movement creating new highs and lows. Swing trades simply involves identifying these new high/low trends and trade with these trends.

Swing trades needs technical analysis for finding trends, entry points, exit points and many more parameters which are essential for making a successful trade.

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Now, we look at how we do technical analysis for Swing Trading.

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Technical analysis for swing trading requires analysis of candle chart pattern, multi time frames chart, technical indicator. All these are very helpful in finding trends, entry/exit points, stop loss points and other parameters which are essential for trade.

I here use Trading View platform to show you how it is done.

First most important thing to do is :

Trading Plan

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The most important thing is to have a trading plan for making a plan you may need to analysis following things:

Multi Time Frame Chart Analysis

In this analysis we use multi time frames of chart like monthly, weekly,daily,4hr chart frames. Multi time frames chart analysis is very helpful as it helps you to get better trend knowledge with great accuracy and helps you to avoid making wrong decisions which you might take by looking at just single time frame chart.

The main reason for this analysis is to find out trends in market with larger time frame chart like monthly,weekly chart. Larger time frame charts also helps you to find out resistance and support levels for asset.

After finding trend of market we use small time frames like daily, 4hr chart to find out good entry/exit levels.

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Chart pattern analysis

This candle chart analysis helps you to find trends of market, entry/exit levels.Market's higher candle and lower candles help you to find out trend in the market. We can also use many candle patterns to identify trends some of them are head and shoulders pattern, triangles pattern.

For finding entry points we can look at doji candle, hammer candle, inverted hammer candle, and many more. we can find exact entry and exit points during our trade with help of candle chart analysis.

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Technical indicator

You can use any technical indicator during your trade . I personally use MACD, MA CROSS, RSI, 21 days moving average, resistance levels, support levels. These really help you to find out right Entry/Exit point , trend reversals.

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Trade Management

Another important aspect need to know before trading. It is basically how you manage your trades by putting stop loss, trailing stop loss as price goes more higher, booking profit.

The right stoploss is placed below/above the previous swing low/high points.

You book profit near resistance levels, or support levels.

Make sure you know about your risk:reward ratio as this helps you to know how much is the risk and reward during that trade. I kept risk reward as 1:3 during my trades.

Before you blindly start trading I suggest everyone to analysis charts and other parameters and always trade by looking at trends , support/resistance levels. Always keep in mind your stop loss, risk reward ratio.

For stop loss I suggest : Fix your stop loss at a price which is 95% of support level.

For booking profit I suggest : Fix your exit point at a price which is 97% of resistance levels.

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My Analysis

I here used trading view platform. I used asset : SBDUSD

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Monthly Chart Analysis

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As you can see I used monthly chart, this helps to find out trend in asset and as you can see clearly price of asset is in bull run from November 2020 till now.

The price of asset has touched highest point after 2017. As the price is in great bull run from last few months and just touched all time high price ( $18.2) in May2021.

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I also used some technical indicator to confirm trend. I here used MACD, MA cross, 21 days MA(black line). All the indicators showing upward trend.

MACD line shows great strength from zero line signaling a good bullish trend to continue.

Price of asset is above 21-day moving average showing a good upward trend.

So, this is how you find trends using larger time frames.

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Weekly Chart Analysis

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As you can see from chart that price of asset is in good upward trend from some time and a reversal movement is also seen clearly after a big upward move.

After the reversal movement, the price of asset is again started to move upward with a strong candle. To support my idea that, the price of asset is again ready to show a upward move I take help from technical indicators.

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I here used used Moving average , MACD indicators to support my points. As you can see that moving average is still showing bullish trend in asset and MACD line is going to cross signal line in a very sharp V-shape recovery which is also seen from histogram of MACD. You can also wait for some time to confirm from MACD signal. I am saying this because as we all know MACD is lagging indicator.

So, this is I how I verify trend in market. And, I think according to my Analysis report price of asset is still in upward trend and yet to go further in upward trend.

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Daily Chart Analysis

This is short time frame which is mainly used for finding resistance/support levels. These shorter time frames also helps to find good entry/exit points , stop loss.

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I used some technical indicator to be sure about my trading.

I used pivot points indicator which is used to find out recent support and resistance levels in price of asset. Here, as you can see recent support for asset is around $4 and resistance level is at around $13.

As the price touched recent support level of $4 just 3 days back and showing a good upward trend afterwards. This trend reversal is also seen with help of MACD indicator which also shows bullish trend.

I also used Moving average indicator to be certain which also shows a bullish trend.

So, according to my Analysis of Daily chart you can trade in asset with stop loss of $4 which is approximately equal to recent low of 5 days and a good support level. You set your target price as $13 which is a resistance level for asset. Also don't forget to trail your stop loss levels when price of asset breaks resistance levels of $13.

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4 Hours Chart Analysis

This analysis is done for getting good entry and exit points.

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As you can see from chart all indicator showing a great upward move after a slight reversal movement.

The trend reversal started just 2 days before and I think you can enter at current levels for an upward move of approx $4. As all indicators are bullish in asset and price of asset has a great support from recent low of $4 just 2 days back.

After analysis of 4 hours chart, I would say, you can start your trade with target level of $13( resistance level) and with stop loss level of $4 (recent swing low).

If price of asset breaks $13 resistance level you can either book profit or you can trail your stop loss to resistance level of $13 which now works as a support level and revise your target level to next resistance level of $18.

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Conclusion

In conclusion, I would like to say, do not blindly trade as it is very risky. Always do your technical analysis before trading , have patience and try toavoid the trap of FOMO(fear of missing out). Believe in your analysis.

Swing trading style is less risky and high rewards giving. You must do proper technical analysis by multi time frames charts, technical indicator, candle patterns. I here in this post try to show you how you do technical analysis for Swing Trading using SBDUSD asset.

Swing Trading is very helpful for those who wants less risk than scalp trading. It is less time-consuming, as you need not to look at charts daily. You just initiate your trade with good technical analysis and just trail your stop losses when targets are achieved.

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It is a great homework task that required a lot of research work and gives a great opportunity for learning. Thank you professor @yohan2on for the great lecture and homework task.