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 The Strategies of Swing trading

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painofhell

painofhell

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The Strategies of Swing trading Empty
PostSubject: The Strategies of Swing trading   The Strategies of Swing trading Icon_minitimeSun Oct 12, 2014 2:10 pm

ing Stock Trading is a style of trading that tries to attain gains from stocks, forex or commodities within one to four days. The swing trader aims to discover this extraordinary potential of stocks that move in a short time period and make gains by trading in them. The trader is not interested in the intrinsic value of the stock rather he pays more attention to their price trends and direction of market trends and studies patterns. They use technical analysis to find stocks which have a short term price momentum.

Swing trading is mainly used by individual traders or day traders. Huge institutions can not do Swing Stock Trading as they deal in big stocks and a quick trading in them is not possible. The individual trader is therefore able to swing trade easily without competition from large traders. The ultimate goal of every trader is to buy the instruments in the direction of market trends and make profits. There are certain strategies designed for the traders which help him discover such high probability trades. The first and most important strategy is to identify the trend. A trader should only place the trades in the direction of the main trend. He should refrain himself from going against the flow called counter trend trade.

Next comes is the wait for pull- back. The trader after identifying the main trend, waits for the market to drop down in price to a level which should offers better value before him entering the market. So, by pulling back he increases his odds of entering a trade which offers better value and proves profitable. This is because he wants to get into the market when the prices are good. The best policy at this stage is to follow the smart money and only do Swing Stock Trading with the trend. He can not take the chances of counter trend unless he is sure of the trade. Timing is of crucial importance here. The trader can not randomly place the trades. He makes sure that the market offers best value when he enters it.

After the trader has identified the price level that is in his favor, he can now proceed to enter the Swing Stock Trading. This is the final strategy in the swing trading process. It sounds simple but it is the most crucial strategy that all the major market movers and big banking institutions follow. They can manage to acquire the odds in their favor and struggle to survive for a longer time in the markets by making huge money. So, by learning the trading styles or strategies a trader can get an edge over the market. Swing Stock Trading can sometimes become difficult and frustrating especially if the trader is a beginner. With a whole lot of misinformation the trader feels lost and confused. But with the knowledge of the various strategies of swing trading the trader can surely make a killing year after year.


Basic knowledge:
It sounds great when you think about swing stock trading, but most of the traders are unaware of the method on how to trade. In swing trading the trader generally indulges into purchasing the stocks in the direction where the trend is strong. In simple words, the swing trader will never trade in the direction which is not in the flow and not matching up the trend. These trades are held on for few days and usually they keep a track of the higher time frame charts which is about 1 hour and more than that while you are monitoring and placing your trades.

There are several distinguished ways in which a swing trader can easily place his/her trades and that also in the direction of the popular trend. The common and useful practice is to wait for the price level to reconstruct before and you need to enter your trade before it extends towards on flow. The entry is done generally on the basis of price reverberating off of support or resistance levels, trend lines or in many situations it may need indicator verification.

In swing stock trading, the swing investors or traders can easily have the odds piled in their privilege by observing the greater and bigger time frame charts and by entering the trades only in the way of major trends in the stock market. This way it will make your business a mind blowing style of trading irrespective of the stock market.

Learn How to Swing Trade: 
In order to learn how to swing trade, you need to have the mastery over the fundamental components of the trading. All the details that are discussed below forms the building blocks for the swing stock trading and are the reasons why extreme professional investors are really productive.

This area embraces the following:

o Trading psychology - 
You need to develop balanced Psychology in order to become capable of trading successfully.

o Money management - 
This management permits a trader to minimize the risks and to increase the return value on their winnings.

o Market analysis - 
In order to do the market examination, there are two ways that are Technical and fundamental analysis.

o Japanese candlestick charts - 
It is the chief element to have an inside look into the stock market and its emotions. You must be capable of reading and understanding the Japanese candlestick formations.

o Trend Identification - 
The swing traders increase their odds by trading in the direction of the trend. You need to find out the correct trend.

o Support and resistance levels - 
These two levels permit the trader to find the crucial levels of the stock market where the trends are in the trader's favor.

o Fibonacci retracement levels - 
Just like the support and resistance levels the Fibonacci retracement levels also allow you to have a good entry in to the market.

o Trading indicators - 
The beginners must look at the indicators which are generally used by the banks and professional investors in swing trading.

o Stop loss - 
Stop losses result in nothing but a little damage; therefore, it is ignored by most of the newcomers in this business.

o Trading hours - 
Always make a good search and then discover your own hours that are suitable for the opening and closing of the trades.......

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