MOST POPULAR SWING TRADING INDICATORS

  • August 31, 2018

Watch our video on using the most popular swing trading indicators.

​Do you use swing trading indicators? They paint a picture and are part of a system that can dictate how to trade. When you're swing trading, you're buying and holding a stock for more than a day. A typical swing trade lasts anywhere from 3-6 days up to a few weeks. Occasionally, our team will hold a little bit longer, say a few months, if the trend is in-tact. 

The indicators are going to tell you if you want to be bullish or bearish with your trade. They charts, and thus indicators on the chart interpret the trend and direction a stock is moving. They also help determine if the trend should continue, or if a possible reversal is nearby. Swing trading options is a great way to profit when you know the direction that a stock is heading.

SWING TRADING INDICATORS 

Swing trading techniques work best in stable markets where the trend is clear. You can ride the stock up and down when you swing trade.

Swing trading indicators tell you which way to ride. The choppier the market, the more difficult the trade, typically. Some traders like choppy markets to sell options and collect premium. But that's another story that you can read more about on our blog. 

The swing trading indicators may not work like you think they should causing you to move away from them. Especially so when you're new to trading and learning how these things work. You can get discouraged and quit.

You need to have a group of people who have your back, or good information, and get experience. Paper trading is a great way to start out. learn the mechanics of trading before risking any capital.

No indicator no matter how simple or advanced tells the future of the markets. Trading is a all about managing risk. But the indicators can give you a picture of the probability of its heading.

Swing Trading Indicators

Swing trading is a phenomenal way to grow your account while avoiding the PDT rule and using smaller capital. To avoid the PDT and still day trade look at our solution with brokers with no PDT rule.

SWING TRADING INDICATORS 

The relative strength index or RSI is a momentum indicator. It's providing the strength of price performance. Not only does it tell you if a stock is oversold but also overbought. Combining RSI with other indicators can help you confirm your entries and exits on trading. 

When a stock is oversold it's selling at a price that's typically lower than the actual value of a stock, and due for a bounce. A price reversal is coming so most people like buying a stock when it's oversold. Swing traders and investors use it so they get more bang for their buck.

When a stock is overbought it's in a constant upward trend. If the RSI is showing that a stock is overbought, you know you don't want to enter at those prices because a correction is coming.

Stocks that are typically above 80 are considered overbought, the more over 80, the more extreme the overbought levels.

The bottom line is...the price of the stock is going to come down, eventually. And confirming with RSI is helpful for swing traders, We use these swing trading signals to find entries as well as exits.

We'll show you on our morning and afternoon live streams, as well as use RSI to help us place our stock alerts.

Swing Trading Indicators

The RSI for AMZN shows that was overbought for a couple months. You could buy while overbought or wait for a correction before it heads back up. Sometimes I'll draw trend lines on my lower indicators like RSI and On Balance Volume. It helps me make trade confirmation.

MOVING AVERAGE CONVERGENCE DIVERGENCE 

Swing trading indicators like the moving average convergence divergence or MACD is also a momentum indicator. It's a trigger for buy or sell signals.

MACD crossovers show what territory a stock is headed to. MACD is considered a lagging indicator. It's not going to update quite as fast as price action.

Though, some traders like to adjust MACD values beyond the default so they can get quicker or slower readings on the MACD...something to play with for sure. 

MACD reveals changes in direction, trend and strength of a stocks price.

Traders will wait until a confirmed cross has happened to avoid a fake out. When a cross happens it doesn't mean it's going to go flying up. Sometimes it's a slow grind before a pop up.

Swing Trading Indicators

In the shaded areas on this chart for NVDA 3 MACD crossovers happened. 2 bearish and 1 bullish. The more space between the EMAs on the MACD the higher or lower the price moves. When the lines are close together price grinds.

MOVING AVERAGES 

Swing trading indicators like moving averages are used to smooth out price movements in the shot term. Moving averages can show long term trends.

Moving average crossovers with the 50 and 200 SMAs are the best swing trading indicators out of the moving averages. You can use the 9 and 20 EMAs but that works better for intra day trading, or short term swing trading (a couple days).

Use these moving averages as support and resistance. You never want to but a stock at resistance unless you're shorting it. VWAP is another great tool for support and resistance.

I look at 50 day and 200 day moving averages  as major daily resistance zones. If a stock is below these averages,  it's typically considered in a bearish trend. Above,  its a bullish trend.  

Moving average crossovers can identify the end of a trade and when to enter or exit. Swing trading allows you to ride the multi day wave.

Ride the move up, get out and ride it back down. Play with observing your favorite moving average crossovers and see what kind of results you get.

Some people like certain moving average crossovers more than others. We scan for specific criteria in making our nightly watch lists.

Always look to trade the momentum of the stock. A stocks price relationship in relationship to the moving average can give a lot of insight to where the stock is headed.

We teach how to trade momentum daily in our trading rooms. Check out our trading service. Take advantage of what we have to offer for free with our free courses, blog posts and more resources on our site.

When you're ready to be part of our live trading chat room, we'll be here waiting for you. We help people learn the ins and outs of trading in a no pressure, no stock pumping environment. 

Swing Trading Indicators

In this chart for AAPL you can see the 50 and 200 SMA had a bullish cross. The 200 SMA was a support level which the stock hit twice before heading up.

SWING TRADING INDICATORS WITH STOCKS AND OPTIONS

Using your swing trading indicators to help you identify the momentum and trend of the stock helps you know which trade to place. You can buy stocks or options (try our stock picks service free for 14 days).

Options are great for swing trading. Knowing the trend help you identify whether or not you want to buy calls or puts.

Not only can you swing trade options as an investment you can also do it for a living. Our swing trade room and next level content library has a lot of content on options. Particularly selling options spreads with higher potential levels of ROI.

Swing trading stocks and options is also a fantastic way to get around the PDT rule. Because you're holding the stock at least overnight the trade doesn't count against you as a same day trade. PDT can be a bane to traders, so you really need a good strategy to get around it.

SWING TRADING INDICATORS & MARKET ACTIONS

Using swing trading indicators keep you from trading blind. Also it keeps you from trading on emotions. Green, red, green.

Stocks change day in day out, so you really need a strong technical system to help keep your emotions in check. You don't have to guess which way to trade a stock.

Sometimes a new trader starts trading without truly understanding how these indicators can help them. It takes time. Once you are comfortable, knowing how to trade weekly options becomes a profitable strategy.

Don't rush! Learning trading is a journey of self exploration. You're going to learn a lot about yourself in the process. Ultimately, have fun and mange risk. Play is safe!

Sometimes new traders stop using them because they didn't work out the way they thought they should. Or new traders switch from indicator to indicator, looking for the holy grail that will make it all simple.

They aren't perfect. But the swing trading indicators help dissect the markets actions so you can make an informed trade. It's not an exact science but it sure helps! Thanks for reading and see you in the trade rooms!

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