Forex swing trading strategy youtube
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Readers are urged to exercise their own judgement in trading. You and your broker will work together to achieve your trading goals. We develop long term relationships with our clients so that we can grow and improve together. Please click on one of our platforms below to learn more about them, start a free demo, or open an account. Open an Account Call Us Free: The basic theory is that the swing chart swings up in price if the current bar has a higher high than the previous bar or swings down in price if the current bar has a lower low than the previous bar.
An important point to note is that, in general, swing charts have no relevance to time. Instead they provide a very visual representation of the direction and strength of the market in regards to price.
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At any one point in time, depending on what the price of a stock is doing, the swing chart will either be pointing up or down. When trading for profit, it is important for a trader to know the direction of a stock over the short, medium and long term. Although depending on the timeframe you are trading, this will determine how you view a swing chart and how you apply your swing trading strategies.
As you can see below, I have included a weekly bar chart together with a weekly and monthly swing chart.
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Notice on the bar chart, the stock has two bars clearly trading above a downtrend line, which would normally signal an opportunity to buy. If you look at the weekly swing chart on the very right of the image, you will notice that it is pointing up, which is also consistent with a good buying opportunity.
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But if you look at the monthly swing chart in the middle, you will see that it is pointing down, which indicates that the larger price movement is down. Weekly bar and swing chart Click to see the image in full size. In trading, you need to assume that the short-term trend will always conform to the longer-term trend. Therefore, given that the monthly swing chart is pointing down, you need to assume, with high probability, that the weekly swing chart will conform to the longer-term trend.
Until the chart indicates otherwise, you would not enter a trade.
Eventually when the stock is strong, both the weekly and monthly swing charts will conform and you will be able to enter the stock knowing with a higher probability that it will continue to move up over the medium term. This is the point where the stock will trade higher than the previous high and, as such, result in the monthly swing chart turning up. Let me share with you a number of rules I recommend you include in your trading plan when using swing trading strategies.
When trading short term, over several days, both the daily and weekly swing charts should both be pointing in the direction of the trade you want to take.
If you trade over the medium to longer term, then both the weekly and monthly swing charts must be pointing in the direction you want to trade. Once again, I would not break this rule, as it will greatly increase the risk you are taking. For some of you, sticking to the above rules will be hard as you may find a stock moves in the direction you want but the swing chart keeps you out of the trade for a period of time resulting in you entering at a higher price.
Support & Resistance Levels
While at times this may be the case, let me say that you need to have faith in this rule because I promise you that it will save you from entering losing trades and, as a result, increase your overall trading returns. Because swing charts only represent the price movement of a stock, they filter out the noise that is commonly associated with bar charts. Therefore, swing charts make it easier to see:. On the weekly swing chart below, I have shown six years of price history. I could have easily included ten years on the chart and it would still have been very easy to read. I have marked horizontal lines on the chart indicating both support and resistance levels, as well as marking where the stock retraced 50 percent of the last up range in the most recent uptrend.
Swing Chart Click to see the image in full size. The uptrend started from the low in March , after which the stock confirmed successively higher swing lows and highs, indicating it was now in a new uptrend. In October , the stock turned down in price to test support before turning back up.