This will keep you at a 3-to-1 profit-to-loss ratio, a sound portfolio management rule for success. It’s a critical component of the whole system since an outsized loss can quickly wipe away a lot of progress made with smaller gains. Developed by Larry Connors, this is a strategy that actually is quite similar to the first strategy in this article. From our own tests, we know that this strategy has worked for a long time and takes advantage of a real edge in the market. Then you just test conditions on the second time frame as you would on the primary timeframe.


If looking for a way to trade these types of stocks, consider the Trend Trading Strategy for High Momentum Stocks. US stocks that are WEAK and dropping, potentially better for shorting. Traders all over the world use Fibonacci retracement tools to find a level to get involved in the market. The three most common levels are the 38.2%, 50%, and the 61.8% retracements.


This guide covers an example that illustrates how to swing trade stocks using a Fibonacci retracement and helps you to identify your swing trading entry and exit points. This swing trading strategy resembles the day trading style whereby traders trade assets gapping down or up on a higher relative volume. The trade’s intraday volatility is determined by the highest gap resulting from company news or significant earnings. Conversely, acquisitions and merger news often result in gaps and not volatility. The case is so because the actual price of shares for the acquisition and merger is announced earlier.

How Do Traders Go About Swing Trading?

The first reason is very common and could be said about the most popular concepts in trading. Candlesticks, chart patterns, and popular trading strategies; with a few exceptions, none of them work when used in the traditional way. This is a measure of a stock’s price trend compared to another stock, the industry, or the market index. It compares the price performance of a stock against others. The stocks that have been performing better than the market are regarded as market leaders while the ones that have been performing poorly are regarded as laggards.

You might swing trade a stock in the next few days, and you might go back to it in a few months because it presents yet another option for you to make money. At the same time, you need to be sure that the trade you’re planning can last as long as needed so that you can make money. Some swing trades won’t work out because of the timeframe, and that’s alright. Results may not be typical and may vary from person to person. Making money trading stocks takes time, dedication, and hard work. There are inherent risks involved with investing in the stock market, including the loss of your investment.


Draw a line across the highs to determine the approximate value at which you should sell. Note that the longer trendline, the more likely it is that the line is accurate. Roughly 37.2 million shares are bought and sold daily as of February 2022. I look for sectors that are outperforming the S&P 500, are in uptrends, and have bullish technicals.

How to Buy & Sell Volatile Stocks

All of these can be applied to your future trades to help you identify swing trading opportunities in the markets you’re most interested in. You can also open a demo account if you would like to practice the above swing trading strategies in a risk-free environment. Now we have reviewed the most popular swing trading strategies, follow the below steps to open an account with us, so you can get started to swing trade stocks. Swing trading is one of the best and most popular trading styles for people with full-time jobs. The case is so because it can run for days, and traders do not have to closely monitor trades or make many trades in a single day.

  • Cutting losses quickly is key to keeping your portfolio healthy.
  • A bad trade, or string of bad trades, can blow up your account, where the loss to the portfolio is so great the chances of recovery are slim.
  • Swing trading is contingent on market conditions, though there are different trades for every market type.
  • With a high winning percentage, it is easy to become overly confident in the strategy.
  • Watch for a candlestick close above the 9exponential moving averageon the daily chart.

One parameter that checks the volatility of a stock is “Beta”. The beta value of a stock is a measure of the stock’s volatility compared to that of the market index. Some swing traders only choose stocks with beta values of more than 1.0. So, in essence, finding the stocks to trade could involve using fundamental data, technical analysis, and the criteria that make up your trading strategy.

Step 2: Conduct Market Research using Technical Analysis

In 1987 with a 2 for 1 ratio, in 2000 with a 2 for 1 ratio, in 2005 with another 2 for 1 ratio, in 2014 with a 7 for 1 ratio and in 2020 with a 4 for 1 ratio. Once you’ve got your screeners running, you’ll start to see stocks listed that meet your criteria. Here’s what to look for if you want to get into swing trading.


This is a classic form of mean-reverting trading strategy, that despite its simplicity and popularity works remarkably well. The slope of the moving average- Here we look at the slope of the moving average and only take a trade if the moving average is sloping in the direction we want it to. Look for potential support levels where the price might revert, and use them as additional information. This really is as simple as a trend following system gets, and still, it worked so well!

However, what they often won’t tell you is how to mentally react when your swing trading strategy doesn’t work. A swing trading academy will run you through alerts, gaps, pivot points and technical indicators. But perhaps one of the main principles they will walk you through is the exponential moving average .

Disadvantages of Momentum Strategies

Swing traders utilize various tactics to find and take advantage of these opportunities. On the other hand, a bearish crossover occurs when the price of a security falls below these EMAs. This signals a potential reversal of a trend, and it can be used to time an exit of a long position. When the nine-period EMA crosses below the 13-period EMA, it signals a short entry or an exit of a long position. However, the 13-period EMA has to below the 50-period EMA or cross below it. A basic EMA crossover system can be used by focusing on the nine-, 13- and 50-period EMAs.

A close below the 9 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. Instead, use your market radar to find swing trading opportunities efficiently. With a basic market scanner and a few lines of simple codes, you can generate a short list of swing trading opportunities in minutes. If the trade has not been exited by your stop loss, close the trade as per your swing trading strategy.

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. A swing trading strategy consists of holding a stock for a few days up to a few weeks. Ninjatrader is a free yet powerful charting platform with market scanning ability.

Market indexes fell right back below the 50-day moving average line the next day and we removed Paylocity stock early to protect profit . Taking gains quickly in a tough market is a huge benefit of swing trading strategy. The market worsened and we avoided the trade turning negative on us and instead left with a 1.4% gain.

In fact, in the US, for example, you may get caught up in pattern day trader laws. So check you can meet any obligations in your financial system first. Pepperstone offers CFD trading to both retail and professional traders. Clients can trade FX, indices, commodities and shares on MT4, MT5 and cTrader platforms.

This strategy finds pullbacks in trending markets, which are the best swing trading setups. A support level indicates a price level or area on the chart below the current market price where buying is strong enough to overcome selling pressure. As a result, a decline in price is halted and price turns back up again. A stock swing trader would look to enter a buy trade on the bounce off the support line, placing a stop loss below the support line. The Fibonacci retracement pattern can be used to help traders identify support and resistance levels, and therefore possible reversal levels on stock charts.

The MACD consists of two moving averages – the MACD line and signal line – and buy and sell signals are generated when these two lines cross. If the MACD line crosses above the signal line a bullish trend is indicated and you would consider entering a buy trade. If the MACD line crosses below the signal line a bearish trend is likely, suggesting a sell trade. A stock swing trader would then wait for the two lines to cross again, creating a signal for a trade in the opposite direction, before they exit the trade.