Swing trading tricks

In the middle of long term trend following and daytrading there is the convenient time frame of the swing trader.

  • The most sought after signal for the swing trader is a swingy chart. That is one with prices oscillating often so that a few days in a row have the same direction. Only then the most common entry signal for swing traders is watched for. It is the reversal point of a directional movement in the chart.

  • The signal for a pivot point can be a reversal day or the break of the former days' high or low. Technical analysis suggests more something like a crossing of moving averages (typically of a longer intraday time frame, say 15 minute bars, to get a short reaction time) or simply the reverse of the direction of the moving average itself.

  • An interesting alternative is to combine swing trading and riding a short trend of a few days' length. In that case the progressive swing trader does not try to catch the very first sign of a possible turn around, instead he waits for the first pullback that often or inevitable occurs. Only if the market comes back, an entry is made.

  • Why may this be the way to go? Because everyone sees the very direct entry point and everyone knows that everyone is seeing it. So some market movers ignite this type of signal only to dump shortly after that their position right into the face of those that came late for a small but relative riskless gain. That is one of the many games big traders play with smaller ones.

  • And there we have arrived at the real combination of swing and trend trading. Go later in the swing against it, bend it around, and then bend it again around, reversing your position from long to short or vice versa. Of course this is only recommended for better capitalized players, and so it does not come as a surprise that this method is one of the favorite market maker tricks at least for intraday operations at daytrading scales. Either they are prolonging a run or they try to get out this way if they were caught on the wrong side.

Forex   Under the millstones of the banks
Futures  Hoping for the trend and finding chaos
Options   Above average? You will still lose!
Stocks   The negative-sum game for investors