Swing trading strategies - start trading at nextmarkets

Last updated: 20.05.2020
Paul Langham
Author:
Paul Langham
Adviser
CFD & Trading
Experience
> 30 years

Although the concept of swing trading is fairly straightforward (simply buy stock at one price and sell it, hopefully for a more advantageous price, a few days or weeks later), the right strategy can significantly increase your chances of success. Here we take a look at some of the key points to remember when working out your individual strategy.

In addition, take a look at what others have done in order to realise a profit.

At nextmarkets, our aim is to provide you with the information you need to make swing trading strategy work for you.

nextmarkets investors

Swing trading strategies explained on nextmarkets

Swing trading involves purchasing stocks (What are stocks?) or shares and hanging on to them until the market is favourable to selling them. Swing traders typically hold on to some or all of the assets they purchase for days, weeks or even months as part of their nextmarkets portfolio.

The intention of a swing trader is almost always to sell when the time is right, in contrast to a long-term investor, who will tend to ignore market fluctuations, looking at trends over several years or decades. Swing trading offers optimal flexibility, enabling traders to manage risk through diversifying and tailoring their assets to optimise market trends. The term “swing” refers to an upward or downward change in the market value of a stock or share.

CFD Trading Software

Swing trading tips from nextmarkets

One of the most important aspects of successful swing trading is to analyse the previous history of the market. By studying both short- and long-term trends, it’s possible to begin to see patterns in market prices.

This allows swing traders to more accurately predict how future trends are likely to shape up (although past performance isn’t always a measure of future performance). The best forex broker swing trading strategies usually involve not only taking advantage on the nextmarkets platform of the information which previous trends can provide, but also completing a considerable amount of dummy (paper) trading in order to try out their ideas before risking their hard-earned cash.

Best swing trading strategy

The basis of swing trading is that a trader buys marketable assets at a lower price and sells them a day or days later at a time when the price is elevated, thus making a profit. Many traders find that their trades are more profitable when they buy or sell immediately after wide range candles (a candle is a pictorial representation of the range between the opening and closing price of a stock: the longer the candle, the greater the range).

Swing trading tips normally work best when the market isn’t too extreme, with both bull and bear markets suitable for swing trade tactics: an extreme bull or bear market makes larger gains unlikely when a swing trading methodology is employed. For nextmarkets traders, there are plenty of resources to help them make these decisions a little easier.

Trading software by nextmarkets

Swing trading strategies UK that work

Most of the best swing trading strategies involve planning and analysis of the market, coupled with a cautious approach to loss: a stop-loss direction on your assets, for example, can help ensure that even if it turns out that you have chosen unwisely, your losses will be limited.

Market trends are usually fairly predictable: by taking a look at trends over the past few years, months and weeks, it’s often possible to get a fair idea of the course a share is likely to take. If you are new to trading, or perhaps commencing trading on a fresh market, a nextmarkets forex demo account can provide some valuable practice before going live with your trading strategies.

Fact Check

  • Swing trading involves keeping marketable assets for longer than a day before they are sold. This period may be a few days, weeks or months
  • Swing trading works by taking advantage of temporary, short-term “swings” in the market
  • Many experts believe that swing trading can net the biggest profits over time
Day trading for beginners

Bull market swing trading

A bull market is an optimistic market, where stock prices tend to be rising. Swing trading in a bull market involves taking advantage of the temporary price dips and fluctuations which occur within the overall trend of rising prices. A swing trader will buy when the price appears to be low, then wait until their profit-making price is achieved before selling.

If the trade does not perform as expected, despite the bull market conditions, the trader may sell at their stop-loss point, to minimise financial loss. To make trading easier, it is possible to set up the price at which you wish to sell (either profit-taking price or stop-loss price) in advance on your nextmarkets trading account, minimising the risk of missing out on the appropriate time frame.

Free Forex Software

Bear market swing trading

Operating in a similar manner to trading in the bull market, bear market swing trading involves studying a downward-turning market in order to detect short-term and longer-term trends to inform stock acquisition and sale. For some traders, this is achieved more easily through the use of a nextmarkets forex trading app.

This not only allows traders to buy and sell their stock quickly and conveniently, there is also access to plenty of pertinent information which can make it easier to limit risk when it comes to buying or selling at the right time to optimise return. During a bear market, swing traders take advantage of short-term upward swings in market price to sell, having bought when the price is depressed.

Swing trading strategy revealed on nextmarkets

Are you looking for a swing trading strategy you can put to use on your nextmarkets trading account? Watch out for narrow candles! If you notice that the ranges between the buying and selling prices in a day’s trading are becoming smaller, it could mean that the market is about to enter a period of extremes.

Small ranges indicate that neither borrowers nor sellers are in control: but this is only a transient situation. Usually, a period of short ranges is followed by a significant shift towards a bull or bear market. When you follow the tips and insights of our coaches, all the best swing trading strategies will be revealed so you can find the best approach for any situation.

Learn how to trade with nextmarkets

Simple swing trading strategies on nextmarkets

Many people have questions regarding simple swing trading strategies. At its most basic, swing trading strategy simply means holding on to tradable stock for a period of time that’s greater than a day, in the hope that the price will appreciate to enable a profitable sale.

A simple swing trading strategy forex traders commonly use is based around buying before the market begins to fall, then selling before the market rises too far. There are a number of predictive tools available to help you work out at what point to buy or sell: nextmarkets Forex trading software can help to determine the right strategy for your trading style.

Are you aware of the 50% rule?

How can you tell if a stock price shift is significant or not on your nextmarkets profile? A common rule of thumb is to follow the 50% rule. The 50% rule comes into play when the stock shifts at least 50% into the day before’s range.

The 50% rule becomes particularly pertinent when the closing price for the day is more than 50% into yesterday’s range. This marks an important shift that’s worthy of further attention, whether buying or selling. A good broker app can help traders to spot shares which are showing this type of noteworthy movement quickly and easily, so you can capitalise on it for the best chance of success.

Forex App by nextmarkets

Best swing trading methods on nextmarkets

There are a large number of nextmarkets online broker strategies to help traders realise a profit on their trades. Whether you choose to adopt simple swing trading methods or prefer a more complex, multi-faceted approach, there’s plenty of information available to help you make the choice that’s right for you.

In comparison with other trading methods, swing trading depends on identifying only one suitable market shift (swing) in order to realise a profit. By buying at the bottom of a swing and selling at the top, a swing trader is frequently able to make a profit. Before making a final decision on your swing trading strategy, it’s worth taking the time to see exactly what each one can provide: some traders take elements from a variety of strategies and combine them to make their own, unique way of working.

Forex swing trading methods

Although swing trading can take place successfully on any market, the forex market is a popular choice, although some people are confused by what is forex. The forex market, or foreign exchange market, involves traders buying and selling currencies from different countries, making a profit or loss according to the exchange rate between the countries as time goes on. One of the major advantages of the forex market is that it is high leverage (it’s possible to achieve high returns quickly), but may also be high risk if appropriate precautions aren’t taken to reduce potential loss as far as possible. At nextmarkets, we provide traders with a lot of insight into the forex market, plus a free demo account with which to practice trading strategies.

how to trade CFD

Did you know

  • Not all swing traders buy when stocks are low and wait for the price to increase
  • Some trading strategies involve buying when the price is rising fast, on the basis that it will continue to rise
  • The stocks may be sold a few days later in order to realise a profit on the trade

Successful swing trading strategies

The most successful swing trading strategies involve waiting some days or weeks before selling, that’s what makes it such a popular tactic for those who can’t sit in front of a computer all day. There are various swing trading strategies out there, but when selling, it’s important to hold out until the price of your asset reaches the Upper Bollinger Band before monitoring a break below the Middle reaches.

When buying, it’s the other way round. While this is best monitored over four hours, it can be applied across weeks and even months. In comparison with day trading (read the nextmarkets guide on what is day trading), swing trading gives traders enormous flexibility. But in order to benefit from swings, patience is vital! The most successful traders are prepared to wait until the time is right and rely on analysis over “gut feeling“.

Free share trading software by nextmarkets

Swing trading strategy guides

Although there is an enormous number of swing trading strategy guides out there, most traders find that generally, the best thing to do is to read widely, then come up with a strategy that works for them. Inevitably, traders have different approaches to risk, different amounts to invest, varying quantities of time that they can devote to trading and a host of other variables. By taking the time to get to grips with the various financial terms, doing your research and engaging in dummy trading (not using real money) on the nextmarkets demo program, it’s usually possible for most people to enter the market with a degree of confidence and in a relatively strong position.

Best swing trading strategies ever for beginners

For beginners selling trades on nextmarkets, we’ve already discussed waiting for your stock price to reach the Upper Bolinger Band and then following up on the swing by looking for a break below the Middle Bollinger Band. Breakout candlestick methods are another indicator to use in the best swing trading strategies, but real knowledge comes down to taking the time to learn market analysis, doing plenty of “dry runs” before trading for real, and being cautious. If we go back to what is swing trading, it’s clear that the key strategy for success is to use market analysis to your advantage in order to work out the right time to enter or exit the market, timing sales or purchases to coincide with beneficial swings in market value.

best trading app

Most successful swing trading strategy in forex

One of the most popular markets in which to undertake swing trading is the forex market (foreign exchange market). Based on taking advantage of the difference in price between various currencies, many traders like the fast moving speed of the market and the opportunity to make big-value trades fairly frequently.

There are a wide range of forex trading strategies available on the nextmarkets platform that can be employed: which one works best for you depends on personality and your preferred approach to trading. Whether you are an experienced trader or new to trading, with the right information and way of trading it’s possible to benefit through the use of swing trading on the forex market.

Get to grips with swing trading terminology

Candles? The Bolly Band Bounce Trade? The London Hammer Trade? Swings? Bear market? Bull market? There is a whole host of trading terminology that you will need to learn in order to trade successfully. If you’re not sure of what something means, it’s always worth checking!

Not only will a good knowledge of terms help when it comes to reading up on strategies to increase your chances of making a decent profit, they’re absolutely vital if you’re going to be able to read informed commentary on the day’s trading or access other vital financial technical information that could really make a difference to the outcome of your nextmarkets trades.

Conclusion: sign up with nextmarkets today!

Swing trading is an exciting opportunity that protects traders against some of the second-by-second price fluctuations which can cause such consternation to day traders. Because the intention is to hold stock for some days, there is more flexibility. With numerous tools available to assist in market analysis, it’s possible for traders to rapidly acquire the knowledge they need to begin making informed choices and develop their own strategy for trading.

Like any other vehicle for acquiring a return on investment, there is a level of risk when it comes to swing trading: that’s why a large number of investors chose to work with a skilled trading broker to optimise their chances of success. We offer a full spectrum of swing investment assistance and support, enabling traders to get the most out of their trading experience. Open your nextmarkets account today to learn more!

Online Trading for Beginners
Smarter CFD & Forex Trading
  • 1000 CFDs on indices, shares, cryptos, and bonds
  • Up to 100 trading ideas per month in real time
  • Free & unlimited demo account
x