The Top Seven Swing Trading Strategies for Maximum Profits and Minimal Risk

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If you are fed up with the stress and uncertainties that are associated with day trading, and are in search of another quick way to make profits other than investing? Then swing trading may be the right trading strategy for you. In this article, we’ll disclose seven tested and trusted swing trading plans, that have helped winning traders make consistent profits.


Plans for Swing Trading

Swing Trading Plan Defined

This can be defined as the rules a swing trader follows when placing his or her trades on the market, intending to make profits from price fluctuations over a particular length of time (days or weeks). The particular type of swing trade may differ, but it includes the use of both technical and fundamental analysis, in picking out trade chances and the perfect time to open or close trades.

Swing trading plans take advantage of short-term price changes in the market. This trading strategy is used by traders who do not have the time or desire to keep a close eye on the market daily. Also, traders who aren’t interested in long-term holdings tend to adopt this type of trading plan.

Swing traders tend to base their trades on a particular financial instrument or market. For example, commodities, currency, options, cryptocurrency, and stocks. Generally, this swing trading plan aims to ramp up profits made from short-term price changes, while at the same time lowering risk while trading.

trading screen

Seven Best Swing Trading Plan Variations

Swing trading can be accomplished through a variety of methods. However, a few of the most common swing trading methods are explained below:

  1. Trend Following

This type of trading is also referred to as “trend trading.” This trading plan is geared toward pinpointing an uptrend or downtrend in a market. Such a trader in this market then enters a trade in the direction of the trend. For example, the trader goes long when the market is in an uptrend, and goes short when the market is in a downtrend. Trend traders use technical indicators like the Moving Average, and trend line to know when to open or close a trade.

  1. Trading Breakouts

This involves buying a particular financial instrument when it breaks out of a trading range. The trader then places a trade in the direction of the breakout. Similar to trend following, this trading technique involves the use of technical indicators, volume, and chart patterns, which traders use to pinpoint when to buy and sell.

man computer chart

  1. Pullback trading

In a ranging bull market, traders who trade breakouts can easily miss quick-moving breakouts. Rather than chasing the price higher, breakout traders will wait for it to retrace a short-term base. The initial pullback following a breakout often poses a less dangerous entry point that gives the same outcome as buying the breakout.

  1. Momentum Trading

This trading plan aims at markets that are displaying strong price momentum and growing volume. Trading relative strength is a very reliable type of momentum trading. The momentum trading plan involves the use of technical indicators like the RSI (Relative Strength Index) and the MACD (Moving Average Convergence Divergence) to identify momentum and determine when to open and close a position.

  1. Mean Reversion

In this type of trading plan, the trader will have to identify a market that is diverging from its historical average price. Such a trader will then open a position in anticipation that the price action will revert to its mean. Traders in this market will have to use a statistical tool like the Bollinger Bands to find when a particular market is trading outside of its normal ranges. The trader then determines when to buy or sell.

  1. Arbitrage

This kind of trading plan involves utilizing discrepancies in the prices of financial instruments on the market, or between two financial instruments. For instance, a trader can buy a stock in the cash market and at the same time sell a futures contract on the same stock. Such traders realize profits through differences in prices.


  1. News-Based Trading

Traders who use news-based trading plans open a position on the market based on the publication of major events or news which is expected to influence prices in the market that he or she trades. Different from the other above-mentioned trading plans, news trading utilizes both technical analysis and fundamental analysis, to identify ideal trading opportunities. Additionally, it is important to know that some swing trading plans bring better outcomes by using a combination of the above-stated trading methodologies.

Generally speaking, any swing trading strategy can be profitable if it helps you accurately identify and utilize price fluctuations in the market. Nevertheless, it is necessary to know that all the discussed trading plans possess their risks. It is therefore necessary for traders to evaluate their trades and manage the possible risks properly. If one is new to swing trading, one will have to consider risking a little amount of capital to experiment with different swing trading plans, to find out which of the plans suits one’s personality.

Learn from market wizards: Books to take your trading to the next level.


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