30 Best Trading Strategies Backtested, Trading Rules And Settings

Mastering support and resistance is essential for successful technical trading. Let’s explore the popular 9/20EMA swing trading strategy; the key here is to watch for a 9/20 EMA crossover on a daily chart. Often, stock moving average lines will be in a downtrend or tied up in a consolidation phase.

Target price movements driven by significant news or events affecting a stock

However, one of the biggest disadvantages of mean reversion trading is that it requires big stop losses. Due to the nature of mean reversion the more the market goes down, the higher the probability that it will revert soon. That means that if you are stuck in a mean reversion trade that goes against you, for each time the security drops one more point, the better the edge gets.

How to Swing Trade?

We’ve covered the basics around swing trading, and discussed swing trading strategy. We even walked you through how to do swing trading and execute your first trade. Traders use moving averages, trend lines, and other indicators to confirm the trend before entering trades to ‘catch’ the trend at optimal points. Swing traders use breakouts to capture quick movements in price, adjusting stops to lock in profits as the trade progresses. Walmart’s stock had been locked in a broad consolidation between roughly $37 (support) and $51 (resistance) from mid-2020 through late 2023.

Wrapping Up Our Guide To the Best Swing Trading Strategies For Beginners

At MTG, we prefer a simple swing trading method based primarily on price, volume, relative strength, and support/resistance levels (moving averages). Other swing traders may also utilize more complex technical indicators such as Bollinger Bands, MACD, and RSI. Also known as “trend trading,” this popular technique seeks to identify stocks that are already in solid uptrends or downtrends, then enter trades in the same direction of the trend. This typically means buying during uptrends and/or selling short during downtrends.

• But these days, it can be as easy as pulling up our top searches, vetting them yourself, and identifying your entrance and exit points.
• The goal is to benefit from rising sentiment and positioning, without exposing capital to post-event volatility or surprise gaps.
• On the NQ 100 chart, price has been respecting a key level around 23600, which acted as a support zone in the past and a support-turned-resistance zone recently.
• Sadly, scams and bad actors are all too commonplace in the world of online trading.
• Traders should be aware of the limitations of technical analysis and incorporate risk management strategies to mitigate potential losses resulting from incorrect analysis.
• Strategies utilizing oscillator indicators make use of tools such as the Relative Strength Index (RSI) and Stochastic Oscillator to detect when markets have reached overbought or oversold states.

MACD Signal Line Crossover Strategy

• The most important factor is correctly identifying the support and resistance levels, a task that can be surprisingly complex.
• On the other hand, if a swing trader is bearish on a stock that is about to undergo a split, they may decide to sell the stock before in anticipation of the price going down after the split.
• This flexibility is a hallmark of swing trading, allowing traders to navigate various market scenarios for potential profits.
• While exact figures can vary based on market conditions and individual skill levels, it’s often cited in the industry that around 10% of swing traders are consistently profitable.
• Every trader has a unique personality and risk tolerance, so there is no “one size fits all” approach to swing trading.

It falls somewhere between day trading, where trades are closed on the same day as they are bought, and long-term trading, which often involves years. It’s about buying at a trough and selling at the crest of a stock’s price movement. The difference between swing and day trading is the time positions are held. Day traders typically open and close positions within a single trading day, while swing traders may hold onto their positions for days, weeks, or even months. The five important swing trading strategies are trend following, support and resistance, breakouts, momentum, and reversals. Automating the identification, testing, and execution of these strategies is the key to successful swing trading.

This process helps you spot potential flaws, fine-tune your approach, and build confidence in your trading plan. With the right knowledge and discipline, swing trading can be a rewarding way to participate in the market. Building off of technical analysis, indicators are what you’ll be looking for when conducting analysis. It could be that the current share price dipped below its 90-day moving average, or that a price seems to not be able to break above a certain price ceiling.

Swing Trading Playbook: Proven Setups for Profitable Trades

If you want a more hands-on approach – and want to be the one to push the button and either sell off your position – you can set alerts for specific prices. Some traders will scale out (take partial profits) as the price reaches interim targets to ensure they bank some reward, while still aiming for larger rewards with the remaining position. Continuation trades usually target at least the size of the prior move (for instance, if the stock ran $10 before consolidating, a trader might expect roughly another $10 move on the breakout).

However, forex trading is a zero-sum game where you speculate between the relative values of two currencies. Stocks and gold have a long-term tailwind from inflation and productivity gains, which you don’t have in forex. Adding further complexity is that forex and currencies are exposed to random geopolitical events – liable to black swans. Seasonal strategies in stock trading try to capitalize on shifts in sentiment depending on the season or calendar. For example, the Santa Claus Rally and Turn of The Month Effect are such strategies.

Larry Connors Trading Strategies are a set of trading techniques and trading rules developed by trader and author Larry Connors. We have backtested and quantified all 75 candlestick patterns, confirming that many are very profitable. Incorporating bond trading techniques can enhance diversification within an investment portfolio and possibly offer returns that do not correlate with other investments, thus providing balance. It’s important to thoroughly research and practice each approach before committing significant capital to ensure a strategy that suits your unique circumstances. Manage your risk exposure in a way that aligns with your risk tolerance and trading objectives.

Its affordability makes it a solid choice for swing traders who want to hold positions longer. For example, if a stock’s 20-day EMA crosses above its 50-day EMA and the price holds above both, it’s a bullish signal. A trader could enter a long position and use the crossover as a guide for exiting when the trend reverses. The first step in successful swing trading is assessing whether the current market conditions align with this style of trading. Swing trading works best in moderately volatile markets where prices move predictably within a range or trend.

Analyze Any Stock Free!

As an exit strategy, one may watch the MACD histogram for a loss of momentum – if the histogram bars start shrinking after a sustained move, Best swing trading strategies it indicates the trend is weakening. Some of the most common swing trading strategies include breakout strategies, support and resistance approaches and momentum systems. Check out blog posts and online guides to work out which works best for you, whether you are purchasing gold or hedging crude oil investments. To become a successful trader, it is important to learn all that you can about swing trading strategies. You can do this using videos, books, PDFs and a variety of other media. Making a consistent profit can be difficult without the aid of technical analysis and a rigorous plan.