Every trader has his or her own preferred trading strategy, ranging from day trading to swing trading. So why do I swing trade? In this post I will share with you my reasons to trade on the higher time frames.
AtoZMarkets.com - The reason why I Swing Trade is because it is easier and is much less stressful than day trading or scalping the market. I no longer need to spend hours staring price action. I have, at my disposal more of the most valuable commodity. Time. Further, it allows me to target more pips. And we all like more pips, don't we?
After years of trading what professionals call "noise", I stumbled on a phenomenon called "Swinging" and not the kinky kind. I mean the other kind i.e. taking a position in the market that would last longer than just a few minutes. Nowadays it is not unusual for me to have open positions that could last weeks at a time.
Why do I Swing Trade? Can you find the true trend?
This concept might seem odd to you at first, but when it comes to keeping your trading simple, then this outlook is excellent. It all starts with the mighty weekly or sometimes even the monthly charts. It is what I call the true trend. Just like a compass pointing to true north. The higher timeframes show us, traders, the direction we should be trading.
GBPUSD Weekly Chart - Why Do I Swing Trade? (Click to zoom in)
Along the same vein, I continue to the daily which is my trigger chart. Checking for trends and ranges that correlate to those that I have found on the weekly chart. When a correlation is spotted, I start working. I carefully analyse my chart stress-free while my counterparts are frantically scuffing on the one, five or fifteen-minute chart.
I won't go into the specifics regarding my entry method. It's genuinely quite simple. A couple of oscillators to indicate overbought or oversold conditions, a good old volatility indicator and a little something to help me confirm the trend. Keep in mind that less is more in the case of technical indicators.
The Almighty Fundamentals
However, the glue that grips this whole thing together is merging technical analysis with keeping a watchful eye on the bigger picture. The all mighty Market Fundamentals. When the charts side with the central sentiment, I get a signal from the market. Yes, these alerts do not come as often. The five-minute chart will always produce more trades. Nevertheless, I am only interested in taking trades when the probability of winning is in my favour.
Kindly Bear in mind that this space will be updated randomly and irregularly. Only when the market is ready to grant us with an opportunity. So practice one of the virtues of a successful trader while you wait. Patience.
If you have any questions in regards to swing trading or about my analyses. Please leave a comment in the section below.