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swing trading what is it?Basic Rules for Swing Traders

Swing trading is a style that tries to capture gains in a stock within one to four days. The method employs technical analysis to look for the short-term price momentum.The following are basic rules of the swing trading.

  • If the trade moves in your favor, carry it home overnight.  The odds favor follow-through. Expect to exit the tomorrow near the objective point. An overnight gap  is a good opportunity  for profits.
  • Focus on only one entry or one exit  point to keep the mental pressure down.
  • Observe. If your entry is right , the price should move in your favor without too much delay.  It may oscillate a little to test your entry point a little.
  • Do not carry a losing trade overnight. Exit and take a better position tomorrow.
  • A strong close usually indicates a strong opening next day.
  • If the market doesn't perform as expected, exit  on   a first pull-back in an upward trend or a bounce in a downward trend. 
  • If you are holding a long position and the market closes flat, indicating a lower opening the following day, exit the trade. Take a  better position tomorrow.
  • Use tight stops when swing trading and wider stops when trading trends.
  • Remember that your focus is to minimize risk and create trades that move in your favor fast, where the stop can be moved to break even.
  • Preparing yourself think and act under duress is the most important part of the equation. Therefore, when in doubt, get out!
  • Place your orders at the market.  Do not get cute trying to price your trades with limit orders.
  • Always anticipate. Do not get caught up in reacting to market moves.
  • Do not trade news. Trade the forex market

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