If you are new to the world of trading, you should know that swing trading is immensely popular among beginner traders. One of the most popular reasons for the immense popularity of swing trading is that it enables traders to capitalize on gains on short and medium price swings in their selected financial markets.
With that said, if you want to start as a part-time trader, and you know that you cannot fully commit to trading, which is a requirement in day trading, then swing trading is the perfect trading platform for you, as you do not have to make any intense commitments.
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A Basic Overview of Swing Trading
Before we explore the best swing trading strategies, let us get a better understanding of what swing trading is about and how it differs from day trading. You might want to view swing trading in terms of a medium-term trading strategy that captures price fluctuations over the period of several weeks or a few days.
On the other hand, day trading is essentially a short-term trading strategy that enables capturing gains within a single day, as you might have already figured out that the essential difference between swing trading and other trading is in the holding, where swing traders can hold trading positions for longer.
Best Swing Trading Strategies for Beginner Traders
Now, let us explore the best trading strategies for beginner swing traders.
The Strategy of Momentum Trading
As a beginner trader, you might want to incorporate the momentum trading strategy, which involves purchasing trading assets with strong price trends. The underlying strategy is to sell those assets when the trend starts to fade. You should know that often these trends are triggered by market sentiment, political events, news, and high trading volume.
As a beginner trader, you can identify these powerful assets by making directional moves or entering the trading market after a slight pullback while things are trending.
The Strategy of Support & Resistance Trading
As a beginner trader, you should know that this strategy is also referred to as “S&R,” and involves the identification of potential price fluctuations where the buying and selling pressure leads to pauses or reversals of price. As a beginner swing trader, you can carefully monitor these price levels to identify potential opportunities at support, especially during a downtrend. You can also identify potential opportunities at resistance, especially during an uptrend.
One of the most common approaches used in the strategy of support and resistance trading is to analyze historical price data with the help of technical analysis tools, so you can efficiently validate these levels.
The Strategy of Channel Trading
Another swing trading strategy that is immensely popular among beginner traders is channel trading. You should know that channel trading is a strategy that involves the identification of parallel trade lines, which form a price check, a lower support line, and an upper resistance line. As a trader, you should buy when prices eventually approach the lower line of the channel. Similarly, you might want to sell when prices approach the upper line of the channel.