Swing Trading System – Important Things You Need Know

Jun 1, 2020 | 0 comments

Do you usually experience a lower market each time you attempt to hit the buy button? Do you hate it when your P&L keep swinging up and down? Are you frustrated each time the market seems favorable but quickly take a nosedive to reach your stop loss? If your answer to all of these questions is YES, then a solution you have been waiting for is at hand – Swing trading.

You are beginning to wonder what swing trading is and how it works right? Relax and take a chill pill. We will get there. In this article, we will walk you through the important things you need to know to apply the swing trading system to enhance your trading profits. We will also highlight the 3 best swing trading strategies that work. On our page with the best metatrader indicators you will find also a good Swing Trade Indicator.

This sounds good, right? Then let’s get started.

What Is Swing Trading Systems And How Does It Work?

Swing trading system is a forex trading method which swing traders seek to capture a swing. The idea of swing trading is to enable forex traders to endure a “little pain” by exiting the market before it nosedives to a stop loss.

In essence, without the swing trading systems or strategies, you can be happy looking at your profits, but in a twinkle of an eye, market forces will wipe your profit away. The graph below clearly shows an example of swing trading.

 

Benefits And Drawbacks Of Swing Trading

Pros:

● Using the swing trading systems means you won’t be sitting in front of your laptop 24/7 monitoring the market.
● Swing trading system is suitable for part-time traders or those with full-time employment
● It is less stressful than day trading

Cons:

● There is an overnight risk
● Riding trends would be a big challenge using swing trading

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Swing Trading Systems Or Strategies

The following are the three swing trading systems that work:

#1. Stuck In A Box

Stuck in a box is an interesting strategy for you to adopt if you want to minimize your losses as you trade in the range market. The ranging market is usually “stuck” between Resistance and Support, just like a box.

So how does this strategy works? Here’s how:

● You will identify a range market and wait for the price to break below support
● Once the price goes below support, wait to see a strong price rejection
● Then go long on the next candle open and set your stop loss below the candle’s low
● Also, set your take profit before Resistance.

At this point, we know you are already wondering why you should set take profit before Resistance. But hey, recall that swing trader are only interested in “one move” on the market.

To improve your earnings, it is best to exit the market before the market starts to experience selling pressures, which is at Resistance.

Does that make any sense? We will be applying this concept to the other two strategies.

#2. Catch The Wave

This is the second swing trading strategy you need to learn. This strategy focuses on catching the swing in a trending market. The essence of Catch the wave is to hint you when to enter a trade after a pullback has ended. However, the only drawback using this strategy is that it doesn’t work on all types of trends.

Here is how Catch The Wave works:

● You will identify a trend that respects the 50 period moving average
● Wait for a bullish price rejection if the market approaches the moving average
● Go long on the next candle if there is a bullish rejection.
● Set your stop loss below the candle’s low
● Set your take profit before the swing high

#3. Fade The Move

You are probably thinking about what Fade the move strategy is about. Well, it is a strategy that enables traders to trade the market against the momentum. This strategy is for you if you like doing things the extraordinary way – going against the crowd.

How Fade The Move Works

● Identify a strong momentum and Resistance
● As the candle forms a strong bearish, look for a strong price rejection to close
● Set your stop loss above the highs and go short on the next candle
● Set your take profit near the swing low.

Conclusion Swing Trading System

The swing trading system is a trading strategy that has been in vogue for a while now. Several traders across the world now leverage this strategy to capture a swing and in the process improve their income. We encourage you not to use this strategy in insolation – combine it with other technical indicators like support and Resistance to get best out of it.

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