Any trading strategy is risky, but it can be highly profitable if you know how to play right and use all the tools at your disposal. This also applies to swing trading, which consists of holding an asset for a short period to make a profit. However, to increase your chances of making a profit, you must start using swing trading indicators.
Various swing trading indicators can show you everything important for making a trading decision and help you make the best trading choices. The best swing traders know the proper swing trading indicators, and nothing stops you from becoming one of them.
The swing trading indicators are explained in this article, so by implementing them in your trading strategies, you won’t ever miss out on new opportunities. By reading this article, you will also learn how and why you should use those indicators, but let’s start by explaining first what swing trading is.
About Swing Trading
Swing trading is a very interesting trading strategy because you will have to pay close attention to the price of your stock.
Simply put, swing trading is getting and holding a certain asset for a couple of days or even months, all to profit from the price changes. So, the profit you will make depends on the price swings.
Swing trading is great for people with full-time jobs who don’t want to leave but want to start trading. That aside, swing trading aims to buy the stock with the lowest price and sell it when it has the highest price. You can buy something without spending too much and make money from it.
But to do that, there are a couple of indicators for swing trading that you should learn and use, as they can be of enormous help.
The Best Indicators for Swing Trading
Swing trading indicators are excellent tools to help you analyze the current market, and people especially love to use them for analyzing cryptocurrencies. However, whatever the reason is, it’s advisable to always use them.
Moving the price in one direction is called a trend. Swing traders make their profit based on the trends that peak between the highs and the lows, so to identify and catch them, they need to understand and use the different indicators.
In continuation, you will find the greatest indicators for swing trading with which you can expand your knowledge and improve your trading techniques, so let's start.
Volume
Let's start with talking about the simplest but essential indicator, volume. The volume indicates the strength of the new trend, and understanding it is quite simple.
The higher the volume, the stronger that trend will be, and the other way around. The lower the volume of the trend, the weaker the trend.
However, let's simplify things. If the volume of a certain trend is high, it shows that more traders are buying or selling it. So, if the stock is going up for a few days, the high volume means that many buyers are interested in buying it.
Nonetheless, if the stock is going down for a couple of days, the high volume means more sellers are interested in selling it. In other words, the volume indicators will show how many swing traders are trading one stock.
Even though the volume swing trading indicator is simple, don't mistake it for an insignificant one. This is an important swing trading indicator, as its correct use will greatly improve your trading game.
Ease of movement
If you want to run a technical analysis on the price of an asset, ease of movement is the indicator that will help you do that.
Ease of movement is the indicator that shows the relation between the volume and the price action. Even more simplified, this indicator measures the price movement.
To understand this indicator easily, you need to remember that when it rises above zero on the chart, the market's price is advancing, and when it falls below zero, the market price is falling.
Moving averages
The moving average indicator refers to the stock price average, and it's great for technical analysis and confirming trends in price movement. To be more precise, the moving average is a great swing trading indicator that can help you calculate the average closing price over a specific amount of days.
An important thing to remember is that if you notice that a short-term moving average crosses a long-term moving average, that's the ideal time for buying.
The moving average can be long-term, medium-term, or short-term moving average, and using the right one can significantly help you confirm the trends in the price movement.
To be more precise, 5 to 50-period moving averages are classed as short-term, 50 to 100-period moving averages are medium-term, and 100 to 200-period moving averages are classed as long-term.
Moving averages, especially long-term ones, are great for identifying trend reversals. That way, you will be able to understand the overall intensity of that trend, but to get the maximum out of them, they’re best used in conjunction with other indicators.
Moving Average Convergence Divergence (MACD)
Moving Average Convergence Divergence is a widely used momentum indicator, thanks to its reliability. If you use it, you can determine the speed of the price movement. If the MACD is above 0, there's a short opportunity on the horizon, but if the MACD is under 0, the opportunity is long.
This indicator will help you identify new trends and distinguish between bullish and bearish trends. A bullish trend refers to an increase in prices by over 20%, and a bearish trend refers to a fall in prices by 20%.
Relative Strength Index (RSI)
The Relative Strength Index (RSI) is a momentum indicator that shows the price changes and will help you determine the speed of the price movement and the trend's strength.
That is provided by comparing different price variables over time. The RSI swing trading indicator will also help you see if a certain stock is overbought or oversold.
The RSI is a line that moves between 0 and 100. But there are limits set at 30 and 70 percent that have different meanings. An RSI reading above 70 suggests that the stock is overbought, and in this case, you can expect a potential reversal and a price drop.
However, if the Relative Strength Index falls below 30, that simply means overselling, so the price might increase.
Stochastic Oscillator
The Stochastic Oscillator is another indicator that is especially useful when you want to find the overbought and the oversold conditions in the market.
The Stochastic Oscillator moves between 0 and 100, but the limits are set at 20 and 80. When the Stochastic Oscillator goes over 80, that indicates that the price became overbought, and when the oscillator falls below 20, it means that the price has gone into the oversold zone.
The Stochastic Oscillator has two lines. The first line is the oscillator, showing the current values, and the other line shows a three-day moving average. This way, you can easily compare the recent prices to the previous trading range. Sometimes these lines cross over each other, which means that the reversal is probably coming.
Bollinger Band
The next significant swing trading indicator is the Bollinger Band, which is a volatility indicator, and volatility indicators are used to measure the stock's price fluctuation.
So, thanks to the Bollinger Band, you will get the info about the price of a stock and how low or high it is compared to its previous trades. This means that you will discover if the stock is oversold or overbought.
The Bollinger Band consists of three lines. The line in the middle is the moving average, and the other two are positive and negative; simply put, they're the deviations of the moving average line. The more the positive and the negative lines move away from each other, the more the market volatility increases.
Tips for Using Indicators and Starting with Swing Trading
Using not too many indicators, a trusty platform, and dismissing your emotions when trading can make a huge difference in the results. So, by adhering to the following three tips, you will be able to use the swing trading indicators more wisely and productively, so let’s take a closer look at what you should do.
Distinguish and use them correctly
Before implementing any swing trading indicators, you must be sure that you know to interpret them and use them correctly. For example, trend indicators are great for determining a trend’s strength and finding entries and exits of the market.
Furthermore, the momentum indicators are great for observing price changes, and the volume indicators will show you how many buyers or sellers there are for a certain stock. The high volatility indicators show the stock's price fluctuation.
Don’t use too many indicators
Even though the above swing trading indicators are great and incredibly useful, don’t choose and use them all. If you do that, your chart will become messy, you will get confused, and everything will become more complicated.
Instead, use a minimum of 1 or a maximum of 4 indicators based on your goal. They will be more than enough, and by being organized and having a clean chart, you will be able to make better and faster decisions. In the end, that’s exactly what every trader tries to accomplish.
Use a trustworthy platform
If you're a newbie and want to get more familiar with the world of trading, the Foolproof Option is the perfect platform you can decide to use. Beginner-friendly and easy to navigate, the Foolproof Options will provide you with everything you need to know to start trading.
Furthermore, you will be getting weekly alert trades via Telegram as the fastest way to get informed about the changes in the market. You will also get a detailed trade plan, so don't worry if you don't know where to start.
Moreover, every step you need to take will be laid out in front of you for only $97, plus a money-back guarantee.
The experts on this platform will guide you in the right direction and prepare you for the trading world. So save your time because this is one of the safest yet most productive ways to learn everything about swing trading.
Eliminate the emotions
Emotions can be your downfall when becoming a part of the trading world, so eliminate them. There needs to be more space for them if you want to profit and become a successful trader. Therefore, you must separate them from the decision-making process and not let them interfere.
Your nerves will definitely be tested, so pay attention to the indicators, make and focus on your plan, and always stick to it.
Why You Should Use Indicators for Swing Trading
Using swing trading indicators isn't mandatory, but it’s better to implement them in your trading technique as they can be highly beneficial. The reasons and advantages of this statement are listed below, so feel free to upgrade your knowledge even more.
On-time information
Using the proper swing trading indicator will give you the needed information before it's too late. The trading indicator will help you understand how the market works and see the changes right on time.
Thanks to that information, you will be able to determine if it's time for you to enter or exit the market without risking too much.
Ease things up
The indicators can be very useful and helpful because they’re very precise and thoroughly explain everything. Therefore, beginners should include at least one indicator in their swing trading because that will ease the interpretation of the charts and the prices.
Thanks to them, you'll be able to determine when it's the right moment to open or close your positions and develop the best trading strategy. Doing this gives you a great advantage right from the start.
Increase your profits
Correctly using swing trading indicators might result in big profits, but that can be even easier if you mix them with other charting tools. They will give you important information to help you make a quick decision.
Plus, combining your trading with indicators will improve your strategy and increase your chances of gaining bigger profit.
Save time
Even though the swing trade requires less expertise, using a few swing trading indicators will save you time, as everything you need to know will be shown to you through them.
They’re precise and concise, which can result in big profits without wasting too much time reading and interpreting your chart.
Conclusion
Time is precious, and using the swing trading indicators will save you lots of it. Knowing and using indicators for swing trading is important because, thanks to them, you can prepare your swing trading strategy and become a successful trader.
With the help of the above swing trading indicators, you can start doing technical analysis and increase your chances of making better decisions regarding your trading.
Remember that deciding which swing indicator is the best depends only on you, so try them out and see how things go.