Full swing trading strategy
There are times when the market starts moving lower when you open a buy order. You may be hoping that your trade will soon come to an end because you are not happy with the fact that the market moved up first and then reversed downwards. To deal with situations like this, you need to learn about swing trading is the best strategy in South Africa.
Swing trading emerged in the late 90s and was used to trade in the futures market. With a swing trading strategy, you can keep positions open for more than three days and maximise your profits by taking advantage of the cyclical fluctuations in price levels that occur during buy and sell trades.
Swing Trading in South Africa
Swing trading is a speculative trading strategy in the financial markets whereby assets are traded over one or more days in an attempt to profit from price movements. Profits can be made either by buying an asset or by short selling. Swing trading strategies often use momentum signals as a practical buying and selling recommendation by financial analysts, which can be applied in swing trading.
In a swing trading strategies stocks, a trader must be cautious and observe the market in anticipation of a particular swing. This method aims to withstand losses that may be incurred when closing a trade before likely to counter the coming pressure.
Swing trading strategies are ideal for beginners and experienced traders alike. This tactic requires minimum time to analyze the market, allowing you to trade with a risk-to-profit ratio from 1 to 3. The only things are needed from a trader - patience and ability to follow key rules of swing trading - not to risk too much, work only on strong signals and not to chase a number of deals. If you manage to meet these requirements, your deposit will grow.
Strengths of South Africa's swing trading strategy:
- High profit to risk ratio.
- Low psychological burden on the trader.
- High reliability of trade. Despite the volatility of the market, swing trading continues to be profitable.
- Simplicity. No specific knowledge required. One working strategy from the list above, patience and compliance with all rules of money management will lead to victory.
- Time. You can devote several hours a day to charts, there is no need to waste valuable time sitting in front of the monitor around the clock.
- Market direction. You can profit regardless of whether the market is now dominated by bulls or bears.
- Profitability. While scalping during the day, you struggle with spread. There are many deals, but the profit may be even less than the one in swing trading. The ratio of time spent to profit is optimal for medium-term activity.
Weaknesses of the South African swing trading strategy:
- Working on higher timeframes requires a trader's stamina. It is difficult for beginners to trade with an intensity of 1-2 trades per week.
- Have higher requirements for a trader's deposit. On M5-M15 stops will be many times smaller than on H4-D1.
- To make money you need to repeat the same action every day, only then the deposit will increase. There are no bright impressions here like in action trading, but swing trading is an effective trading method.
The weaknesses of swing trading are simply peculiarities and should be accepted.
Common mistakes in swing day trading strategies:
- Ignoring market conditions on higher timeframes. A trader may try to find an entry point on H1, for example, but he or she has no right to ignore what is happening on H4-D.
- Attempting to subdue the market instead of adjusting to it.
- Violation of risk management rules. This is especially important for beginners with a small starting capital.
- Working without a clear money management.
- Haste and desire to trade constantly instead of waiting for a signal that meets the rules of the TS.
- Inability to admit mistakes and take a loss. The trader either does not use a stop loss or constantly moves it back, hoping for a reversal of the market.
- Counter-trend trading. Swing trading does not involve working against the market.
- Averaging, martingale and other risky tactics. These approaches work in capable hands, but in swing trading they violate one of the basic rules - bet on reliability. With martingale, the strain on the deposit increases.
All traders disappointed in swing trading have made at least 2-3 of the mistakes described. They are the problem, not the tactic itself.
If you are a trader who is suited to active management, we will look at swing trading strategies stocks you can use:
Active trading: Moving Average
This strategy will help determine the correct positioning of the stop, using the moving average indicators. When price has broken through the moving average, exit the trade. This strategy is very useful in swing trading. For example, in 'wave trading', where the moving average can act as dynamic support and resistance in the market.
Active trading: Previous bar (Up/Down)
The strategy is based on the previous bar on the chart. You set a stop loss using the stop loss of the previous bar high. When the market gets close to this point, having closed near it, you will need to exit the trade. You will also need to exit in the opposite scenario. For example, you can use it during a "vanishing move" if the market quickly turns against you. This way, you won't give your trade too much room to settle and will quickly cut your losses if the market shows signs of reversing.
Swing traders must base their decisions on a variety of factors - fundamental, news and technical.
While fundamental analysis is useful when selecting stocks, one should still not delve too deeply into it, and the main focus should be on the technical picture. Swing trading is based on the theory of market cycles, the essence of which lies in the understanding that market movements are not straightforward, but cyclical in nature.
Traders who adopt a swing trading strategies stocks in South Africa can also use the sentiment of the market crowd to predict the direction of future price movements, as price movements follow the structure of the Cycle Model. Prices move in line with supply and demand ups and downs. The balance between the buyers and sellers leads to the price consolidation in some range. Any imbalance causes the price to move out of the consolidation zone and move up or down.
The best entry points into the market are the end of a correctional movement and the resumption of movement in the direction of the global trend. A price reversal near a support or resistance level can be an excellent entry point into a long or short position. Swing traders identify market phases and use the transition from one state to another. A trend is followed by a correction and then a new trend develops. Traders investigate patterns where the trend may continue in the same direction and points where a trend break and reversal may occur.
How do I invest in swing trading strategies stocks in South Africa?
To learn how to invest in swing trading strategies stocks in South Africa, you will need some time and a small amount of money from the comfort of your own home. First, you need to decide on a broker, and choose an online trading platform and complete the registration process. It's easy and free!
You have to provide your personal details (name, email address) and confirm the registration process. Remember to do this, so that you always have information about open trading accounts in front of you. After registering you can now start trading in the stock market.
If you are a beginner, use a demo account to gain experience. Working with a demo account allows beginner swing traders to master the system's operating principles, as well as understand the swing day trading strategies. Also, you'll understand how operations are performed, what orders are and how they are placed, what advisors and indicators work.
Invest only as much money as you are prepared to lose. Only invest your own money. Take control of your financial future now!
To start making real profits from swing trading is the best strategy in South Africa, then open a real trading account and make a deposit. It is very easy to do! To do so, choose one of the funding options offered by the system: by bank card or via one of the electronic payment systems online. Depending on your chosen top-up option, it may take a few days for the money to arrive.
You will need a minimum amount of money. Of course, such an amount will not bring you much profit, but most importantly, you will get a smooth growth and gain experience. Only a sound trading system and strategy can give you the confidence to work! So go ahead, have a successful trading!