Watch our video on how to use swing trading strategies and setups that work in the real world. Remember to attend our daily classes on swing trading in our trade rooms!
What Is a Swing Trading Strategy & Which Strategies Are Best?
- A swing trading strategy consists of holding a stock for a few days up to a few weeks
- One of the best swing trading strategies is to ride the 9 ema or 13 ema
- Look for small candlestick entry off 9 ema or 13 ema on daily chart
- Take entry off break above small candle off MA support hold
- Ride the 9 or 13 until you get half of a candle body close below (50%)
- Exit trade once this happens
- Best to take profits along the way and look for re-entry
- Dip buying reversal candles off support levels is a great strategy
- Credit spreads also great way to collect premium
- Minor directional bias needed with credit spreads
There are several different simple swing trading strategies that work which you can use if you're swing trading. The video above will give you a high level overview of swing trading and teach you the right and wrong ways to swing trade. Check out our advanced options strategies and basic options courses if you're looking to learn how to trade options and apply the material from this blog.
1. Different Methods For Swings
In this simple swing trading strategies that work post you're going to learn how to swing trade stocks. With these simple swing trading methods you're going to develop your trading edge. We'll also go over advanced swing trading setups with how to find entries and exits, and the most effective swing trading indicators to use on your charting platform. If you're looking for an epic charting platform, try TrendSpider today.
We're going to give you the overall big picture with swing trading setups. If you're looking to go more in depth, we got you covered. Make sure that you take our free swing trading course at your leisure.
Learning how to swing trade stocks takes time and is an art form in and of itself. It takes a lot of practice to learn and to perfect. There are several different high probability swing trading strategies to choose from, and you’re going to want to find the right strategy for you. Finding the right one to fit your lifestyle and personality is KEY! Don't overlook this!
As always, the best way to learn how to swing trade stocks safely is to trade in your paper trading account, and treat the money as real money. If you can’t make money in the simulation, how can you expect to make real money? Read our how to start investing in stocks post if you're just getting started.
2. Simple Swing Trading Strategies That Work
Riding the 9 ema on a trending stock is one of the more popular swing trading strategies. When following this 9 ema strategy, it's important to find stocks that are in an overall uptrend, with strong momentum, and then use the 9 ema to ride the stock up. Use the inverse strategy if you're playing a stock that is bearish and wish to short it. (Ride the 9 EMA down).
Watch for a candlestick close above the 9 exponential moving average on the daily chart. Then buy on the first intraday candle that breaks the high of that previous daily candle using the base of that previous candle as a stop. It's also nice to spot 9EMA / 20EMA crossovers. This is where a 9 day moving average crosses over the top of a 20 day moving average, signaling to the bulls the party is underway.
You could use a 5 minute or 15-minute chart time frame to find an entry. Ideally, you'd want to try and get your entry on the 1 minute to get your best fill, but some traders like to use the 5 min for swing trading setups.
How Much Money Do You Need to Be a Swing Trader?
- How much money do you need to be a swing trader? For options it's best to have between $2500 to $5,000. For penny stocks $5,000 to $10,000. Stocks over $10, it's best to have over $25,000.
1. Ride the 9: Swing Trading Strategies That Work
Once you get your entry you ideally want to see that 9 ema start to push upwards and separate from the 20 ema. The daily candlesticks also need to move up with your 9 ema. Sometimes the 9 ema will trade sideways before it starts pointing upwards. But, the 9 ema needs to push in an upwards direction for a potential continuation.
Always wait for confirmation on swing trading strategies. Realize, that buying closer to the 9 ema is less risky than buying further away from the 9 ema. We want to get the best entry possible with swing trading setups, so we can stomach the pull backs, dips, and profit taking.
A close below the 9 ema on the daily chart would be a potential sign of weakness and time to either take your profits or cut your losses. Also, be aware of your stop from the low of that previous candle to determine if you're going to stay in the trade.
Many of times a stock will doji below the 9 and then will bounce causing a fake out. This will cause you to stop out prematurely. Just be aware and follow the technicals to determine your exit strategies. I prefer to use candle CLOSE price as my stop as opposed to a doji. I have had too many doji's stop me out in the past and learned the hard way. But ultimately, it depends on my entry price where I get stopped out at.Looking for more stock training? Take our free online trading courses to help you get started.
2. Setups for Swing Trading Strategies
Lets go a little bit more into the popular 9/20EMA swing trading strategy/ The key here is to watch for a 9/20 ema crossover on a daily chart. Many of times a stocks moving average lines will be in a downtrend or tied up in a consolidation phase. What you're watching for is the 9 ema to cross the 20 ema and a candlestick to close above the 9 ema on the daily chart.
Your entry would be the next candle to break the high of that previous candle on the daily chart using the 5 minute or 15 minute chart as your entry. When trading this 9/20 ema crossover strategy it's very important to be aware of the other moving averages such as the 50 or 200 SMA. If they are above your position then they are potential resistance areas. If they are below, they are support levels. Also, don’t forget to draw your diagonal trend lines to find support and resistance levels on your charts! These are swing trading strategies that work, over and over again.
Does Swing Trading Work?
- Swing trading does work if you know how price action and technical analysis works. Once you know the technicals then you need to know which strategy is best to trade. Credit spreads are a great way to sell stocks and collect a premium. Buying shares of a stock off support and selling near resistance levels also is profitable.
1. How to Swing Trade Stocks With Sma's
We'd recommend having the 50 simple moving average and 200 simple moving average lines on your daily charts. These are the most popular SMA lines that traders pay attention to. Some traders also like to have the 100 sma as well.
Moving average lines play the role of showing key support and resistance areas. The more room that the stock has to run, the better. I will try and find angular trend line resistance, or a daily or weekly moving average time as a profit target ahead of time. Again, I love to use TrendSpider for this, because it makes it so easy!
Again, if you get in on a 9/20 crossover then ideally, you'd like to have some room for the stock to run before it hits those overhead moving average lines. The closer the price gets to those moving average lines the more likely traders will look to take their profits.
What Indicators Are Best for Swing Trading?
- Here's a list of what indicators are best for swing trading:
- Price action and candlesticks are the best trading indicator
- Candlesticks patterns are the most reliable
- Stock volume and high relative volume = liquidity
- Important to remember most indicators are lagging
- Lagging indicators meant as a guide
- No swing trading indicators are foolproof
- Moving average lines are helpful support and resistance guides
- RSI (Relative Strength Index) shows overbought and oversold levels
- MACD - also very popular trading indicator
If you're looking for how to swing trade stocks and set up your swing trading indicators effectively then make sure to take our free swing trading course at the bottom of this post. It's going to walk you through everything. It's our way of giving back and paying it forward!
Alright, so we know it's extremely important to learn the art of how to draw support and resistance levels. Learning how to chart a stock and find critical support and resistance levels will be an important process when using these simple swing trading strategies that work.
1. Books on Swing Trading Strategies
Check out our recommended stock market books post and purchase some books on candlestick charting and trading psychology if you need more help.
Red to green moves intraday could also be a potential entry area for a swing trade if the setup looks good. Read our Market Club Review if you're looking for a good swing trading scanner and custom triangle system for buying and selling signals.
Options trading strategies are also very popular swing trading strategies. Trading put and call options can save you a lot of capital when entering a potential swing trade. Options trading can be a complicated swing trading technique to learn, but the overall concept is the same.
Options strategies work the same way as we discussed above. Follow the technical analysis of the 9 ema. Look for trending stocks and ones with potential 9/20 ema crossovers.
It's important to always make sure that you take your profits along the way, especially when selling options. Never get too greedy. Remember, no one can predict what a stock is going to do, and no strategy is going to make you money 100% of the time. If you see someone claiming otherwise, you know they are full of it.
All it takes is one trader somewhere in the world to change the direction of a stock. A big seller when everyone is buying or a big buyer when everyone is selling. Or it could be a news headline that causes the surge or drop in a stock. It's all good. Just manage your risk, be patient, and chart your stock and wait for your entry!!
3. No FOMO!
There are always stocks with great entries out there to swing trade several times per week, so don't get FOMO. Fear of Missing Out! This is why most traders fail.
They let their emotions get in the way of their trading. This is why it's important to always define your potential entry and exit strategies before entering into any trade. Then you are not scrambling to figure out what to do as the stock is going up or down!
Always have at least a 2:1 profit/loss ratio to ensure that your potential gains outweigh your losses. Cut your losses quickly if a trade goes against you. I usually look for 4:1 profit loss ratios.
The best traders in the world fail on trades close to 40% of the time. However, they've become masters at cutting their losses quickly. They realize that the market and their trade could turn against them at any moment. They also know how to hedge, for events.
These traders who have been around awhile know all about risk. that's why they predefined their risk management strategies. This allows them to separate their emotions when trading. This takes time to develop and practice. You can do it! Proper technical analysis techniques will be critical when determining whether to enter a swing trade.The Cloud is a very popular indicator that traders use with swing trading strategies. It gives you a great overall big picture when looking for support and resistance areas. Dip buying is a very popular swing trading strategy that you should look into if you're looking to learn how to find good swing trade entries that minimize your risk.
Which Time Frame Is Best for Swing Trading Strategies?
- The daily chart is best time frame for swing trading less than a couple weeks
- 1 hr charts are good time frames for holding less than a week
- Weekly charts are good time frames for trading weeks to months out
- Monthly charts good for holding several months
The Ichimoku Cloud is a very popular indicator that traders use with swing trading strategies. It gives you a great overall big picture when looking for support and resistance areas. Dip buying is a very popular swing trading strategy that you should look into if you're looking to learn how to find good swing trade entries that minimize your risk.