What is swing trading? and which are the Three pillars of swing trading?

What is swing trading? and which are the Three pillars of swing trading?

 

Swing trading refers to a speculative, short term type of trading, that attempts to capture gains in a financial instrument within a timeframe that can range from one day to two weeks. This financial instrument can be Stocks, options, futures contracts, currencies etc.

Swing trading was the first system that I personally learned how to trade when I was a beginner in trading and it’s a style of trading that I just absolutely love it even today.

Swing trading is all about technical analysis it’s absolutely for everybody. If you are young, old if you have a lot of capital in the account if you don’t have a lot of capital in the account that doesn’t matter. Swing trading is something that everybody can do.

 What I love about swing trading is it takes out the fundamental analysis.  when you are doing positional trading or long-term investing whether you are a value investor whether you are a growth investor you have to look at market cycles you have to look at economics you have to look at growth rate, earning reports, valuations of the companies.

As a swing trader, I focus only on the price, trend, pattern, support and resistance.

 

A swing trader simply goes pivot to pivot (from a key support level to another key resistance level) while the positional trader tries to capture  the entire trend in the market and an investor tries to capture the entire trading cycle in the market.

If you are looking at it from a trend perspective, what swing traders try to do is they buy at support and sell it at resistance, the intension of the swing trader is to constantly repeat the same process over and over and over until the trend kind of comes to fruition and something happens economically or fundamentally to the stock and it reverses the trend.

 In terms of this, we always trust that the history is going to continue on into the future what a positional trader tries to do instead of capturing pivot to pivot they try to capture the entire trend and so they are not going to buy at each pivot they are going to buy it pivot one  they are going to add to the position of pivot two and they are going to add a little bit of pivot three and they are going to scale into the position until something changes in the whole time they are going to be raising up that stop-loss locking in some profit and position.

 

What are the important things you should know as a swing trader?

1.      Identify the trend- to know the direction of trade.

2.      Identify the support and resistance- identify the support and resistance level to determine when to enter the trade and when to exit.

3.      Identify the pattern- identify the pattern to know the probability of profit.

 

Three pillars of swing trading

 

1.      Price is king, price is everything.

There is so much noise everywhere in the world, I mean there will be many arguments on the direction of the market based on the political news, company news, sectorial news etc. we focus only on price action nothing else matters.  

 

 

2.      Price moves in cycles and trends

 

Price moves cycles and trends because it creates patterns and patterns have the tendency to repeat themselves over and over and over until something happens and what we call them variables, variables are things you cannot predict, variables are not based on the probability, variables are the hypothetical scenarios that could happen in the future that impacts the price of the instrument today and we can’t get caught up in the hypothetical variables because we don’t know what  will happen in the financial market upcoming days.

 

 

3.      History repeats itself

 

What we know the truth of the market is price action, price is everything price moves cycles and trends and that history has a tendency to repeat itself over time.