Posted by forex at 6:12 AM
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1. Open an account. Before swing trading can begin, a trader must have a funded account and be acquainted with their trading platform as well as the general dynamics of the marketplace. Using a simulated trading account to practice before using real capital is a common and highly suggested way of gaining valuable experience at minimum or no cost.
2.
Learn candlestick patterns. All trading is about finding prices to enter and exit a position. This information is encoded in candlestick patterns, which reveal whether buyers or sellers are in control. If buyers are eager to defend a specific price level, it's an indication a stock will stay above that level. A level that sellers use repeatedly as an exit point suggests this price level will not be exceeded without a fundamental change. Some specific candlesticks are traditionally recognized by swing traders as confirmation signals for getting in or out of a trade (see Resources below).
3.
Master moving averages. By calculating the average price over a certain period of time and then plotting these averages on a graph to form a line, a visual representation of a trend is created. Comparing the moving average lines of different time periods indicates whether recent price action is stronger or weaker than historic norms. Not only can this information help illustrate trends, it can give specific entry and exit points as swing traders frequently react to moving average levels when they're reached.
4.
The trend is your friend. Trendlines are easy to spot, which probably accounts for why they are so effective in providing support or resistance. Even the break of a trendline can be a powerful indicator to the vigilant swing trader, as the chart of the S&P 500 shows. Defined by the support it had provided, the trendline suggested a swing trade short as its support was broken. Rather than try to time the exact top, swing traders look for such technical insights to increase their chances of success.
5. Manage risk. Probably the most important skill for a swing trader is knowing how much risk to take to balance potential reward with potential loss. Learning what types of trades to take and how much capital to risk is crucial for success over any period of time.