Swing Trading Strategies and Methods

Swing Trading is particularly known for bringing the advantage of increased market profitability in day trading which can be achieved at a slower pace of trading.

A trader believing in swing trading can hold stocks for several days or weeks assessing the momentum of the trends. In this slow-pace trading, trader will prefer to hold positions that are seen gaining the maximum momentum in the market.

This helps in making short-term gains in the market and thus helps building the equity.

How does the strategy of Swing Trading work?

In Swing Trading, the basic idea is to identify a strongly trending stock, once its correction period is over. After its period of consolidation is complete, a strongly trending stock often makes quick moves and a trader can gain by this market movement of the stock. After investing in such stocks, a trader can sell them after a few days to gain a particular percentage of profit.

One can repeat the process again and again to keep multiplying the profit. Thus, a trader can gain in the market by capturing the quick moves of the stocks that are gaining the maximum momentum in the market.

Advantages of Swing Trading

  • In Swing Trading, one can increase the potentials of trading by trading at a relatively slower pace.
  • The strategy is good for the part-time traders, as one needs not to worry about the minute-to-minute market changes. A swing trader doesn’t require much dedication to stay glued to their PC or computer systems.
  • Unlike day traders, swing traders can earn big profits in the market by buying fewer stocks only. They are generally charged with lower brokering fees.
  • A swing trader needs not to be in hurry to execute trades and this gives them a desired flexibility which a day trader doesn’t enjoy in general.
  • Swing Trading strategy is often considered good for individual investors who aim for bigger profit levels from their short-term trading investment in the stock market.
  • Perfect for the individual investors who have less time and resources to focus on the market movements that keep taking place on almost every moment.


Strategy Overview

Swing Trading and Methods are short term systems used by traders when trading their options as well as stocks. They are preferred for a number of reasons. Normally, day trading can last for up to one day only but the Swing Strategy and Methods can extend that time for up to between two and six days. However, that is not the maximum that Swing strategies can last. They go for more for a maximum of 2 weeks or so.

A trader, who is smart in making use of swing trades, can actually hold his stocks for the above mentioned period, a period in which he will be accessing the market trends, and ends up making huge profits.

Swing trading has been described by many people, experts not excepted, as a slow-pacing trading but many agree that it is the best way to make good returns.

This strategy’s central objective is helping traders in monitoring the trends ruling the stocks market and see to it that they make the most out of their options without running into unnecessary losses. In addition, this strategy seeks to analyze the techniques used in the market and present them to the traders in a manner that they will be able to understand easily.

Swing Strategies and Methods have many goals but there is usually one which stands out and tends to guide these strategies, identifying the trends of the trade in general and making sure that the gains in the same are captured in swing trading. On the other hand, there is the technical aspect of this. That is, a technical analysis is done to guide traders on how they will make the most out of the trend in the markets. That way, the traders will definitely become excellent swing traders in the market.

Markets and Instruments

For a successful swing trade, you will need to choose the best out the many markets and instruments available in the market today. The choice of market and instrument usually does directly determine the much that a trader will make out of his options.

In other words, there are certain markets and instruments that a trader can choose and end up making more money that he could have in another. Out these many markets, a swing trader stands to make big profits by trading in the precious metals, crude oils, commodities and currencies markets. These markets are offered by most of the brokers and the items are usually in high demands and therefore, a trader can make some quick returns here.

On the other hand, all the brokers offering these markets are regulated and therefore the security of a trader’s funds is never compromised. There are, also, various instruments available in these markets which make trading much easier and more of fun. That is because these instruments allows the trader to conduct his trade from wherever he might around the world.

Saxo trader 2 is one of the instruments that have proven to be very effective. This is offered by Saxo Bank and with it comes a number of tools that help a trader in making the trading. The tools include technical analysis and superior charting tools.

Time frame

The timing for this strategy is usually strategic. Since the guiding principle for this is maximizing on profits, traders have to be crafty with their timing. On many occasions, many traders do not appreciate this aspect of time and as such they end up with empty accounts. Even the use of technical indicators will be rendered useless when ill timed.

Different markets need different approaches which can be short, intermediate or long-term. Since different traders deal in different commodities and services indicators here are usually used to make predictions. The secret here is to be able to time when the market is on the upward trend and what make that up trend.

However, there is no specific time frame to do your trade.


It is essential to understand the tools required in this form of trade before you start to trade. This will give you an insight on which one to pick in order to avoid being disappointed at the end of the day. Some tools are long-term while others are short-term. Most traders usually prefer the short-term.

The short-term trading tools include:

  • Limit orders which usually helps the trader to define each stock trade
  • Loss orders, with this one, a trader be able to guard himself against any possible losses

Before you start

Just like it is the case with doing anything else, there are several things that you will need to understand first before you finally embark on swing trading. Experts call this “swing trade strategies and methods 101”. The way that you enter into the market or your first move the market is very important.

Most traders who enter the swing trade market are mostly concerned in the short-term moves and therefore, technical analysis is of much importance. A trader also needs to understand the moves made in the market. That is, bullish (up) and Bearish (down). Most traders make a lot of money by selling off first then buy back later at definitely lower prices. In addition, a trader will need to fully understand what the technical indicators as well as chart patterns means and how they work.

Another primary concern to any, particularly the new trader, in swing trading is the trading environment. Since this trading environment keeps on changing from time to time, a trader will require familiarizing himself with the trends.

Step by Step Guide

Any trader who wants to make it big in the swing trading must be ready to learn all what it takes to do so. Even the experts are quoted as referring to swing trading as one of the most risky investment and therefore, that calls for on to have a good understanding how to trade in this field. Below is a step by step guide.

  1. Set aside some money for trading. This must be deposited in your account. This will be your capital. Experts, however, warn that people should not trade with money in their cards. Professional swing traders all observe and emphasis on the need to limit the “swing trading capital”. They say, to be on the safe side, a trader should start by trading a maximum of 20% of the total investment.
  2. Practice before starting to trade. Financial experts recommend that a trader ought to practice first before embarking on the actual trade. This practice is commonly known as paper trading.
  3. Look for the best broker of all. In order to make the most out of swing trading, a trader will definitely need to hire services of an experienced and safe broker. The broker must be reliable and effective in its services. Consider the rates and customer support in every potential broker in order to arrive at the best of them.
  4. Test the account given by your broker. Start by what can be termed as a small investment. If it turns out well then you can increase your investment.
  5. Make sure you are familiar with the tools of trade used in the market. In most cases, there are two tools. That is stop loss order and the limit orders. Learn how they work.
  6. Once you are familiar with all these, then you will be good to go. Close positions, as the experts say. It is also called profit taking.

Position Size

The position size can actually be calculated. It all depends on the amount of cash that you have. Ensure that your stop loss orders are placed just below your support levels. After this, try and increase the number of shares

Risk and Money Management

It is an open secret that swing trade does come with a number of risks, particularly if not well traded. The risks mostly come as result of the movements in the market, either sideways movements of prices or the bear market and bull market effects. Therefore, for a trader to manage this properly, he must remain focused on the trends that are in the market.

In addition, in order to manage risks associated with different markets, strategies and trade, the best solution is choosing the best, effective and reliable.

Exit Strategy

When a trader gets into swing trading, he should actually anticipate either of the two inevitable scenarios, making a profit or a loss. These two can make a trader to exit the swing trading market and therefore, it pays to understand the exit strategies available in this industry. They are:

a. If the trade is unfavorable to you
b. If by any chance the stocks gain profit

These two basically are the base of one’s exit strategies. Prior to getting involved in a trade, it is important for a person to think about what they will do in the case that their stocks don’t do very well. Due to the fact that most disciplined traders will keep records of how their businesses are progressing, it would then be easy to assess the progress and make the right decision. If the business is not making progress, then they better quit. If this is the case, then such a person has to think about his/her future-where will they go right after this


Using trailing stops in swing markets


Selling at resistance in the swing market strategy


Recommended broker, software and platform

Having reviewed and compared most of the brokers, software and platforms in the market today, we can authoritatively recommend one which we found to be more reliable, safe and effective. AVA TRADE is one of the brokers we highly recommend. This broker is well regulated by Financial Service Authority (FSA), ASIC (Australia), CFI (Ireland), which are reputed binary trading broker regulators. Their AvaTrader, Metatrader 4 and AVA Mobile are also amazing and effective trading platforms that any trader can use without any trouble.

AVATRADE also has one of the most professional customers support staff and services available in different languages. All of its software are also easy to use and enables a trader to trade even with mobile phones from wherever he is. The web-based Ava Java is particularly amazing to use. All a trader needs to is installing this software and he will be ready to trade.

Let’s get started...

Broker Rating Markets Available Fees Open an Account
Kawase Logo
1 Star2 Stars3 Stars4 Stars5 Stars
Rating 3.44 /5
(16 votes cast)
Shares, Indices, Forex and Oil Spread From 0.1 and 0.2% Commission Visit Website
MaxFx Logo
1 Star2 Stars3 Stars4 Stars5 Stars
Rating 4.66 /5
(90 votes cast)
Indices, Forex, Metals, Shares From 0.1 Raw Interbank Spread Visit Website
London Capital Group (LCG) Logo
1 Star2 Stars3 Stars4 Stars5 Stars
Rating 0.43 /5
(127 votes cast)
CFDs - Foex, Indices, Stocks, Commodities, Bonds, Interest Rates Variable spreads from 1.2 and small 0.1 commission on Shares Visit Website

Login to Comment

Share your experiences with our community. You must be logged into post a comment. Sign up as new CFDMaster member or Log in using your Facebook account and get instant access today!

Risk warning: Your capital may be at risk. CFD trading is suitable for experienced traders and not beginners.