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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