I am going to reveal 3 best swing trading strategies for beginners.
These strategies are tailored for trading Gold, Forex or any other financial market.
I will explain entry signal, stop loss and take profit placement for every strategy and share a lot of examples based on real trades that we took with my students.
COMMONALITIES
First, let's discuss key elements that unite these strategies.
1. All the strategies will be trend-following.
It means that the trades will be taken strictly in the direction of the market trend.
2. All the strategies will be daily time frame based.
Daily time frame will be the main time frame for the market analysis.
3. All the strategies are technical analysis strategies.
The decision-making and market analysis will be strictly based on technical analysis: price action, support and resistance.
Strategy 1: Break of Structure Swing Strategy
Break of Structure is a classic swing trading trend following strategy that is based on:
1. Bullish breakout of the level of the last higher high in a bullish trend
2. Bearish breakout of the levels of the last lower low in a bearish trend
Bullish Break of Structure
In a bullish trend, a bullish violation of the level of the last higher high and a candle close above that is a very strong bullish signal.
It signifies the strength of the buyers and indicates a highly probable bullish continuation.
A perfect entry point after a confirmed Break of Structure is the retest of the level of the last higher high.
Stop loss is 1 ATR.
Take Profit - the next key resistance.
Look at EURCAD pair on a daily time frame.
The market is trading in a bullish trend and we see a confirmed break of structure - a daily candle close above the level of the last higher high.
Here is how the trading position should look.
Take profit is the closest resistance based on a historic price action.
Look how perfectly this trade played out.
Bearish Break of Structure
In a bearish trend, a bearish violation of the level of the last lower low and a candle close below that is a strong bearish signal.
It signifies the strength of the sellers and indicates a highly probable bearish continuation.
A perfect entry point after a confirmed Break of Structure is the retest of the level of the last lower low.
Stop loss is 1 ATR.
Take Profit - the next key support.
Above, EURNZD is trading in a bearish trend on a daily and we see a confirmed break of structure - a daily candle close below the level of the last lower low.
Here is how a short position looks - entry is on a retest of a broken structure, stop loss is 1 ATR and take profit the closest key support.
163 pips of pure profit were made.
Strategy 2: Trend Line Swing Strategy
Trend Line is a classic swing trading trend following strategy that is based on:
1. Rising trend line based on higher lows in a bullish trend
2. Falling trend line based on lower high in a bearish trend
In a bullish trend, higher lows may respect a rising trend line.
Such a trend line will be a strong vertical support.
It will provide a safe point for buying the market.
Entry will be based on a test of a trend line.
Take profit will be at least the level of the current higher high.
Stop loss will be 1 ATR.
Rising Trend Line
When you are looking for a trend line in a bullish trend, remember a simple rule.
A valid trend line should be confirmed by at least 3 touches and 3 consequent bullish reactions to that.
For example, a rising trend line on a GBPUSD above will be invalid trend line because it is confirmed by just 2 touches.
While the trend line that I spotted on USDCAD is valid, because it was already respected 3 times in a row in the past.
Above is the valid rising trend line based on higher lows in a bullish trend on EURJPY.
Here is how a swing long trade from that trend line should look.
Stop loss is based on 1 ATR. Entry from a trend line.
Take profit is based on the current higher high.
Almost 300 pips were made.
Falling Trend Line
In a bearish trend, lower highs may respect a falling trend line.
Such a trend line will be a strong vertical resistance.
It will provide a safe point for selling the market.
Entry will be based on a test of a trend line.
Take profit will be at least the level of the current lower low.
Stop loss is 1 ATR.
When you are looking for a trend line in a bearish, remember a simple rule.
A valid trend line should be confirmed by at least 3 touches and 3 consequent bearish reactions to that.
The trend line on EURGBP above is invalid because just 2 touches confirm it.
While that trend line is valid and confirmed by 3 strong bearish reactions.
In the example above, EURCHF is trading in a long term bearish trend.
Lowers highs perfectly respect a falling trend line.
It can provide a safe entry for swing short trade.
Following the rules of our trading strategy, here is a swing short trade from that trend line.
Stop loss is 1 ATR. Take profit is based on the current lower low.
250 pips of pure profit were made.
Strategy 3: Higher Low / Lower High Swing Strategy
Higher Low / Lower High is a classic swing trading trend following strategy that is based on:
1. The last higher low in a bullish trend
2. The last lower high in a bearish trend
Higher Low
In a bullish trend, the level of the last higher low composes an important horizontal support from where, with a high probability,
a bullish wave may initiate.
This level will provide a perfect entry for swing long trade.
Stop loss will be 1 ATR.
Take profit will be the resistance based on current higher high.
USDCHF is trading in a bullish trend on a daily.
The levels of the last higher low is a perfect point to buy the market.
According to the rules, stop loss is based on 1 ATR.
Take profit is based on the current higher high.
Great winner and nice trade!
Lower High
In a bearish trend, the level of the last lower high composes a key horizontal resistance from where, with a high probability,
a bearish wave will initiate.
This level will provide a perfect entry for swing short trade.
Stop loss will be 1 ATR.
Take profit will be the support based on current lower low.
Look at EURUSD on a daily.
The pair is trading in a bearish trend.
The level of the last lower high provides a safe point
to sell the market from.
That's how a short position should look based on the rules of the trading strategy.
Stop loss is 1 ATR.
Take profit is based on the last lower low.
Entry is the level of the last lower high.
Target was quickly reached.
All these strategies are very accurate.
It provides good reward to risk ratio and is very easy to understand and apply.
Remember that for swing trading, you should carefully measure a lot size for your trades, because the positions on a daily have quite a big stop loss.
Try one of these swing trading strategies and find the one that suites your trading style.
