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INTRODUCTION

Our topic today would be based on a strategy called the “SWING TRADING”. This strategy involves the use of a not so small but big time frame when setting traders for a much wider profit.
Unlike our last we studied about scalp trading which is the opposite of swing trading involving the use of smaller time frames. They scalp profits and stay on the lookout incase their trade goes off its predictions.
Today ill be showing you all how swing trading works and how to use it, using some illustrations and explanations. So lets begin.......😊😊😊😊

What is swing trading

Swing trading is a type of trading strategy where a trader holds a trade for a certain period of time, its a not so long or short time, possibly days or weeks depending on their analysis. The time frame of this strategy is basically on a medium scale since its neither as long as a position trading or short as a scalp trading.

Traders using this strategy try to take advantage of the swings in the market or market volatility. Tge market never moved at straight line but as prices flunctuate the candle sticks move zig zag showing that the market is never at a particular price. The traders point out posible up or down trends and opens a position some days before it thereby making profit from its movements till the time of exit. Swing highs are signals placed in short positions and swing lows are signals placed in high positions are signals placed in long positions.

Type of swing trading

Reversal trading

Reversal trading operates based on a change in a price momentum. You open this trade based on a change in trend movements. For example when a downtrend loses its momentum and starts to go upward.

Retracement trading

This strategy involves tenporarily reversing a price within a particular trend. The prices retraces itself temporarily and then moves again. It is a countertrend within a major trend

Breakout trading

This strategy exists during an uptrend. Traders take positions earlier on an uptrend and find a price to exit or breakout. You open a position as the price breaks a certain key level of resistance.

Breakdown trading

Unlike the breakout strategy, here , you open a position earlier on a downtrend and look for a price to breakdown.

Advantages of swing trading

Its not time consuming

The seing trading doesnt require much commitment. Although compared to a long period trading it a little busier. Since your trade is over some days or weeks , you have little work to do.
In short term trades youll need to be keeping close eye on your trade to avoid losses as its just a min trade but with swin trade it is less time consuming

Profitability

With a good and careful analysis, swing trading can be impressively profitable. Since the trade stays longer than short trades the profit accumulate with any trend movements until your exit point.although you must have to be consistent and careful when placing trades. With a little lot size your losses are reduced too.

disadvantages

there is much exposure overnight

This trading strategy involves placing trades to stay daya and possibly weeks, hence it comes at some certain disadvantages as price gaps begin to develop. These can occur when there are earning reports or market news during an after hour market or on weekends. Overnight losses can occur as you are basically exposed, hence it renders your stop loss useless .

mental preparedness

Another main problem with this strategy is that ,swing traders could be affected by their emotions. Sometimes when theyve set a particular price and exit planned, overtime they ay see the market going south and decide to change it without realizing their mistake until the inevitable outcome. Most of these insecurities may result from news, stories or rumors.

swing trading using BNB

Im going to be using BNB today to give illustrations on how swing trading works. From the types of swing trading strategies listed above , we’ll be looking at a break out trade while making use of the triple screen strategy, founded by Dr. Alexander Elder. A close friend of mine told me about this strategy not too long ago and its wuite impressive. So basically it makes use of 3 different time frames to determine the movements of an asset price. The reason for this strategy was based on the ideology that no indicator can give accurate signals on a time frame.

First screen (weekly charts)

Using the triple screen strategy, the first screen would use a momentum indicator. Ill be using an 8period EMA due to its speed and for the second a 13 period EMA.

_{Using EMA of 8 and 13 length it shows a clear downtrend with a little resistance but futher advancements on its bearish}

_{THE MACD INDICATOR CONFIRMS ITS FUTHER DOWN TREND ALTHOUGH A POSSIBILITY OF IT GOING BACK UP RIGHT AFTER THE BEAR}

From the 2 images above, the EMA shows a clear downtrend in the prices of BNB. I also included an MACD indicator which confirms this observation. You can see the red histogram below on the MACD.

secondframe: dailychart

This frame is used to determine market bias which is the market direction to be traded. Ill use an RSI oscillator to know wheter the market is about to continue its normal trend after leaving an overbought region

The volume shows no changes in the fall.the RSI on the other hand is still in a downtrend as its below 40. In the next frame I’ll determine where to place a position.

Thirdframe 4 hour chart

This is the final frame where the main work begins. Right here, we’ll point out our entry and exit points and where we place our stop loss.

The market showed signs of an earlier down trend and so I believe itll be oversold once again which will then lead to a price reversal. I placed my stop loss not too long after.
I let my market hit 674.68 which was close to its previous high. With a second stop loss placed before it. I exit my trade at it and take my profit.
Major market trends
Monthly chart- uptrend
Weekly chart- downtrend
Daily chart - downtrend
Hourly chart- down trend

Reasons for my entry

The BNB currency has bee doing pretty well and soaring really high this past month despite the overall decline in prices of cryptocurrencies. Going as high as $676 dollars and falling down to as low as $257. I will there fore set a stop loss as $308 so that once the market picks up and moves towards and uptrend .
My stop loss- $308
Take profit - $455
Trailing stop loss - $522

In conclusion

Like every strategy in trading, swing trading also poses great risks with great loss. Therefore to use this method efficiently you'll need to practice and gain experience overtime with the market. Although this trade is also very conducive and less stressful as you could just place a trade and go on with other things plus the profit is usually impressive. Despite these conveniences traders must not let their guards down.

Cc:
@yohan2on