Best Indicators For swing trading? Swing trading is a kind of trading which is accessible for all newbies, experienced and seasoned forex traders across the world. Though it is a fast pace forex trading, still its pace is little slower than day trading or scalping, giving sufficient time to the traders to calculate the odds and place the trades. It gives the traders enough time and space to formulate a trading technique or a process and do research before actually dipping themselves in to the pool. Swing trading is often seen as preparatory class for day trading. It gives ample scope to the traders to sharpen their trading skills before venturing into more complicated fast paced day trading. Swing trading strategy makes use of moving average (MA), relative strength index (RSI) and volume and are the best indicators for swing trading. Learn more about MA, RSI, and volume indicators and how they are used in forex trading strategies.
How you do swing trading?
Unlike day trading, in swing trading you can hold on to the stocks for as long as few days or week. Since you can hold on to the stocks for longer period of time you have larger scope to increase your profit margins. If the stocks are held for a longer period, you can take the liberty of being lazy while taking decisions regarding your trade entry. In case of shorter time frame, you can mainly focus on entry and exit points of the trade.
Top indicators for swing trading!
There is a plethora of indicators which can be regarded as best indicators for swing trading. It mainly helps you in deciding what to buy, when to buy and when to trade.
Moving averages is undebatable the best indicators for swing trading. Basically it shows the lines which have been calculated using past trades and price changes. It is one of the most crucial indicator to be referred irrespective of the fact whether you are day trading, swing trading or long term trading. It is quite easy to understand and use.
Traders use this indicator for both identifying the trend in the market and also for confirming the trends. This indicator determines the average by adding up all the closing prices in given number of days and then dividing the total of closing prices with the number of days. It becomes all the more effective when it calculates different averages in different time frames and place them on a chart for easy understanding. It not only gives broader view of the market to the trader but it also helps the trader to understand average changes in the market over time.
You can effectively use such charts in identifying the trends in the market. For example, if the current price of the financial instrument and its trend is far away from its moving average then it will be considered as a week trend. After judging the trend strength, you can combine it with other indicators such as volume in order to take right decisions for trading.
You can also use crossovers in these charts to determine the trend reversals. If you notice a recent moving average crossing a longer moving average, then you can expect a trend reversal in the market. Though you should not use this tool solely to judge the trend reversal. But you can surely use it as a tip for further investigation of trend reversal in the market.
Relative Strength Index!
Another strong indicator for swing trading is relative strength index or RSI. It secures a place in the list of best indicators for swing trading mainly because it helps you in judging the point from where you can enter the market. It is one of the best indicators to judge short signals for trading. It plays an important role in determining market trends such as being over bought, over sold, range bound or is flat. You can also evaluate security of the current price using volatility of past price and performance using RSI. It uses the range of 1-100 for identifying the price change and trend change in the market.
RSI can prove to be very useful in determining various conditions that lead to the market being over bought or oversold. Once you are able to determine such conditions then you are in the condition of judging both trend reversal and correction. Over buying can be seen as bearish trend in the market while over selling signifies bullish trend in the market. If we talk in terms of indicator RSI then range of 70 is an indicator that the security has be overvalued and is overbought while the range of 30 means that the security is undervalued and is oversold.
Apart from that you can also identify divergence using RSI. Divergence is an important tool of identifying the reversal in trends. For example, if the price of the security hits new high but RSI does not hit the same height then it can be a bearish divergent signal. Similarly, if the price hits new low but RSI doesn’t then it can be seen as bullish divergent signal.
There will be no exaggeration is saying that volume is an indicator which is usually over looked by the traders but it can prove to be quite useful for both new and seasoned traders. It can help the traders in considering the trends of the market. A trend can become all the more reliable when it is supported by the volume. You need to make sure that substantial volume of trade is taking place in the direction of the trend. It will be interesting to note that rise in volume of the security means that money in the market is supporting the security. On the contrary if the volume is low and is not increasing with time, this means the security is either undervalued or overvalued and at the same time it is either under bought or oversold. Thus volume is one of the best indicator for swing trading.
Visual analysis indicators!
Visual analysis indicators help both new and seasoned traders to see what exactly is happening in the market in a quick glance, understand it and take right trading decisions.
If you are looking for some of the best indicators for swing trading supported by MT4 and MT5 platforms then you should definitely check out our page off the Best Metatrader Indicators It is home for top trend indicators which will simplify your trading experience by many folds.