Most investors will choose to buy their positions and then hold on to them, waiting for market conditions to improve before they make a trade. This way, they are able to benefit from a good return. There are those investors who are incredibly patient, waiting for years and collecting small dividends over time as their returns. Then there are those that are in a hurry to get their returns, especially if there is a small appreciation in the pair they are trading. That is what swing trading is all about. To make the most of this strategy, you need to know these three swing trading indicators.
Video: A Quick Explanation of These Three Indicators
1. Moving Average
The first is the moving average where the focus is on identifying a trend and/or confirming the trend. The easiest moving average indicator to use is the simple moving average. It requires that all the closing prices be added up for a specific number of days, and then taking the total and dividing it by the same number. On a graph, it is possible to plot the average so that one can understand what is happening with the market price.
2. Relative Strength Index
To determine the best positions in the forex market for swing trading, you also choose from the second indicator which is among the best technical indicators for swing trading. This is the RSI which stands for Relative Strength Index. This indicator helps provide information that is ideal for entry into the market. It helps with the investigation of short signals, under a certain presumption. That is the fact the market may be overbought or may be oversold. It is an excellent strategy when the market has proven to be flat as well as range bound.
3. Visual Analysis Indicator
Technical indicators provide a wealth of information, but sometimes, it is much easier to have a visual pattern to work with. This makes it much easier to see what is happening within the market and guide your decision. This is the third swing trading indicator, visual analysis. There are some patterns that one can look out for especially as an indicator for a swing trading strategy.
Tips to Make You a Better Swing Trader
Now that you know the best swing trade indicators, here are some tips that will make you an excellent swing trader. Start off by identifying your support as well as resistance levels using technical analysis. This means that you should be able to read the chart to determine the area within the chart where there is some support or resistance.
Learn how to identify wide range candles as these make it easier to reveal turning points within the swing trade. With this, you will be able to find out when a stock may reverse.
Swing trading is the secret to success for many traders. Look into it, study how it is done, and make quick returns on sudden changes in the market.