Features of Swing trading
Swing trading is a kind of tentative activity on the financial markets that involves keeping a tradable asset for a number of days with the objective of making profits from any “swings” or price changes. Usually, swing trading positions are longer than day trading positions, but shorter than those buy and hold positions that could be held for several months. You can make profits by purchasing assets or through short selling.
Techniques in Swing Trading
Swing traders use a variety of math-based objective techniques to buy and sell. This helps in eliminating the more subjective and emotional features, and difficult analysis involved in this form of trading. You can use the trading rules for creating a Trading System based on technical analysis for getting buy and sell signals.
Alexander Elder Strategy
• The Alexander Elder strategy is a simple trading approach based on rules.
• The strategy involves measuring the price trend of an instrument through 3 separate moving averages of closing prices.
• The only time when this instrument is traded Long is if the 3 averages move in the upward direction. They are traded Short only when the different averages move down.
Trading systems could lose their potential for profit when they are used by a larger number of traders. As the competition increases, the profits become smaller.
Every swing trading strategy comes with the challenge of determining the right time to enter and exit a trade. However, it is not required for swing traders to choose the ideal time to make profits from buying at the bottom and selling at the highest price movements.
Combined with disciplined money management principles, tiny but regular earnings can help compound your returns over a long period of time. Usually, it is taken that math-based algorithms and techniques cannot work in the case of every market instrument or situation.
Types of Risks
Usually, the risks involved in swing trading correspond with market assumptions. The chances of loss in this form of trading increase through a trading range or during sideways movement in prices. This is contrary to if a bull or bear market moves clearly in a particular direction.