How to apply Swing Trading?
What are the suggested timeframes for swing traders? and
What is swing trading?
Swing tradingone of the trading approaches that stock traders use in the market.
In this approach, they have open positions in the stock market for a small number of days only.
They square off their positions in a few days time. Therefore swing trading lies in between intraday trading and positional trading.
Stock tips from your broker are carried out when you do share trading in the stock market.
The stock broker analyses the swing trades for you and helps you take high likelihood positions in the share market.
What are the benefits of swing trading?
Sitting in front of the computer and monitoring the whole day is not require as a swing trader.
Spend some time during the trading hours and analyze their trades is all that is expected as a swing trader.
As swing trades do not last for more than a few days, the capital is not held in the market for a very long time.
The Indian share market permits swing trading in stocks and shares. On the other hand, if you prefer to short a stock and carry forward the position for a few days, you will have to trade in stock futures.
How do we employ in swing trading?
Swing trading applicability is based on two main factors. They are the trend of the market and the high prospect support and resistance levels.
Whether you need to be a buyer or a seller in the stock can be determined by the trend of the market.
The stocks are generally determined to be bullish in an uptrend, bearish in a downtrend and neutral in a sideways trend.
A daily chart is used to analyze the dominant trend of the stock in the case of a swing trade.
Analyzing the trend on the daily chart and trading according to the trend is necessary.
The support and resistance levels as mentioned earlier are the next factors that one has to look out for before taking a swing trade.
These are considered as part where there was the maximum disparity between demand and supply leading to a swift rise or fall in the share price.
You will need to look at the 60 min chart to spot high prospect support and resistance levels.
The last time frame that you need to look into in your swing trades is the 15 mins chart.
The 15mins chart assists you to narrow down the support and resistance levels so that you have less risk on your trades.
It is necessary as a trader to use these three time frames in order to take a swing trade on a stock.