Best swing trading strategy 2023

The swing trading strategy is designed to profit from the changes or ‘swings’ in the price of an asset you are trading. The positions are generally short term and held for a few days but can be held for a longer time if the trade is profitable. Swing trading focuses on short term trends and their potential to make smaller gains. Over time these gains can be consistent and amount to lucrative annual returns. 

We have looked at a few swing trading strategies and have summarised below what could help you identify trading opportunities. You can apply these techniques to the stocks you’re most interested in and see which one is the best swing trading strategy for you. These include:

Support and Resistance Levels

Support levels indicate a price area on the trading chart that is under the current market price. The interest in buying outweighs the pressure of selling, causing the price to go up. Resistance levels are the opposite of support as they show a price area above the current market price, and the pressure of selling outweighs buying, so the price to go down. These are highly important when it comes to technical analysis and can help you build a successful swing trading stock strategy around them. One thing to remember when using support and resistance in your swing trading strategy is when the price breaches either the support or resistance level, they switch roles. For example, what was once a support level is now a resistance level and vice versa.

The Fibonacci Retracement

It can be used to help individual traders identify support and resistance levels and look into possible reversal levels on stock trading charts. This Fibonacci trading strategy can show you how the stocks often retrace at a certain percentage before reversing again. The strategy is based on numerical values to assist you in revealing the potential reversal levels.

SMAs (simple moving averages)

This trading technique is one of the more popular choices. It involves using simple moving averages or SMAs. SMAs calculate an updating average price, constantly. It can be taken over a range of specific periods or lengths. If you were looking at a 10 day SMA, it would add up the daily closing prices from the last 10 days and divide that by 10 to calculate a new average each day. Each average calculated is connected to the next. This creates a smooth line to help cut out the ‘noise’ or price fluctuations out of trend. If your SMA has a shorter length, it will react quicker to the price changes than those with longer lengths. 

MACD (moving average convergence divergence).

Another popular swing trading strategy is MACD, which shows the relationship between two moving averages (MAs). The purpose of a moving average is to determine the trend direction of a stock price and its support and resistance levels. The MACD has two moving averages called the signal line and the MACD line that indicate when you should consider buying or selling. These take place when the MACD line and signal line crossover. If the MACD line crosses above the signal line, it means you could consider buying. If it crosses below the signal line, it is suggesting you sell. As a swing trader, you would then wait for those two lines to cross again and create a signal for a trade in the opposite direction before exiting your position.

Channel Trading

This swing trading strategy wants you to identify a stock displaying a solid trend and trading within a channel. This strategy requires you to pay close attention to the movement of the stock’s price. It is important for you to trade with the trend, so you would look for buy positions if the price is going upwards. Likewise, if the price is on a downward trend, you would only look for sell positions. Exceptions include if the price breaks out of the channel.

Now we will look at how a swing trading forex strategy can be integrated when you set up a trading account with us. We included some steps to open up an account with us below to start swing trading stocks.

Opening a trading account with us only takes five minutes to register. We offer commission-free trading and the option to have access to our on-site trading experts and curated coaches for more hands-on advice. We are accessible both on our website and via our free stock trading app. You can research the stock market using technical analysis. Our platform will help you spot price signals and other essential trends in your swing trading strategy. 

Once you have looked through the assets, you can then choose the one you want to swing trade. You can then use our site and trading coaches to help with your research on that asset and decide what time frame you wish for the position to be open and then closed.

You can then open the position of that asset and begin to monitor it. If there is any volatility or movement in the price, take note of it and be aware of any significant changes in the market as you do. This is where your preferred forex trading strategy comes in, for example, using support and resistance levels.

When your time frame is up, you can then exit the trade. To reduce the risk of loss, you can also use a stop loss which essentially caps your losses at a specific price.

Swing trading does take time to fully understand as it combines technical and fundamental analysis in order to know when a price movement is significant and avoid idle moments. This analysis benefits swing traders as it is more efficient and can result in higher returns. Although it can be difficult at first for the average trader, our specialised team of experts are here to help you expand your knowledge and skills to get the most out of swing trading. 

It is essential to choose the right assets to swing trade as bad or unreliable market selections can weaken your swing trading strategy. So, we included some tips for you to think about before choosing the right stocks. 

Continuously monitor financial calendars. The economic calendar helps identify which announcements will affect the price swings in the stock market. Similarly, the earning calendar includes news on organisations to help you factor in sudden price movements to your swing trading stock strategy.

Look at chart patterns. Regularly check how the price of an asset is moving in the trading chart. Consider if it is following a trend and use your preferred strategy to help identify these patterns. Watch out for highly volatile stocks as their movement does present more significant risks.

It is helpful to find stocks that are relatively calm and not excessively volatile. We suggest not looking at significant movements but more steady ones, including a constant price action where you can figure out the possible entry and exit signals. The more you practice, the more you’ll be able to know when to buy or sell. Also, consider how the market conditions can change, so what worked one day may not be as successful the next day. 

So, we looked at several stocks to swing trade for you and narrowed it down to these top three for both beginners and advanced traders:

Apple

If you choose to buy Apple stock, it is an ideal asset to help develop your understanding of trends in relation to news and announcements. Apple is on an upward trend and has multiple product launches throughout the years that also affect its price. When you monitor the announcements of these products, watch to see how the stock will respond. Using technical analysis and understanding the fundamentals of Apple will help you with swing trading and what to expect with the trends in the price.

Netflix

Netflix has also had a price increase. Like Apple, you may decide to buy Netflix stock because it is a popular name and comes with a good amount of liquidity you will need to swing trade. You can use the best swing trading strategy to interpret the technical data. For example, Netflix has risen above its 50 days moving average, so the MACD strategy might work well when looking at the important signal lines to determine when to buy or sell your position. 

Tesla

Like a lot of popular stocks, Tesla benefits from the announcements the company makes. If you want to buy Tesla stock, you should again understand and monitor the prices when a new product launches. Because of the following CEO, Elon Musk has, the power of social media like a tweet or a recent interview he does will also impact the response to Tesla and the overall stock price.

Learning how to swing trade, in general, can be challenging. You need experience in technical analysis to be able to interpret market charts and graphs. We offer the appropriate coaches and trading tools to help you gain that knowledge of swing trading if you need it. Trading takes a lot of time and practice to master, but once you’ve got an understanding, the rewards will follow.

We know that swing trading can be pretty challenging at first. But, with the support of our curated coaches and fully-equipped trading platform, your skills will develop, and your swing trading strategies will become more successful over time. 

Our commission-free service online and on the free stock trading app aims to enhance your swing trading abilities so that you will fully understand the market charts and the trends and movements in the price of your chosen assets.

Swing trading requires focus and time to master technical analysis and your swing trading stock strategy. We provide the tools and guidance to get you there.