Swing Trading Strategies: How to Apply to Every Market Successfully

Swing trading is a passive strategy that all traders should have in their arsenal. TRADEPRO Academy is going to focus on Swing Trading Strategies in regard to Futures, Options and Forex. This article will help all you swing traders out there scope out the best opportunities. No matter which market you decide to focus on.

The top three markets we will discuss through the course of this article are as follows: Forex, Options and Futures.

Swing Trading Strategies: Step 1 – What Market Will you Trade

There are many factors traders should consider before diving into swing trading and choosing the perfect for their risk parameters and goals. Having said that, TRADEPRO Academy urges all traders to keep tabs on all markets out there because they all have effect on one another. In other words, correlations. If you decide to focus on equities, don’t forget the currencies because a change in fear or greed can have an effect on the equities markets. The same can be said if the trader looks to take the path of Forex, do not forget to look at equities when trading currency pairs.

There are several factors to consider when deciding which market to actively trade in a passive swing trading perspective. Traders who look for equities trading will lean toward Futures and Options. Others who would rather trade currencies will lean towards Forex. Other differences include leverage, of which the Futures and Forex markets are more adequate. On the other hand, Options have more customization built into their strategies than the other two. We cover all of, Forex, Options and Futures extensively in our courses. We will also cover select options strategies a little farther in the article.

Swing Trading Strategies: Step 2 – Identifying the Current Market Trend

Its a well known fact that the successful trader is one that follows the trend and jumps on its side, riding it out with the big money. The trader that goes against the trend is one that will not last long in this career. In that respect, identifying the market trend is vital for swing traders. When swing trading it is important to keep tight risk management depending on the market you trade. There are volatile choices in selecting markets one might want to trade, in either Futures, Forex or Options Markets.

TRADEPRO Academy has made the identification of the trend easier for traders with this following tool (Secret tool). For those not privy to the tool , there are other ways one can identify the market trend.
In these following few charts, we will go over some steps that traders can take to help them identify general trends when look at, an equity, a currency pair or a futures market.

Equities (Options) trend identification – Swing Trading Strategies

Let’s first begin with a simple stock. Suppose a trader is looking to trade options on Apple on a swing basis and they are looking for the direction of the current trend. A quick little tip is to draw trend lines on multiple different time frames and see what “story” the market is telling you. The large left image is a monthly time frame, the top right is a weekly and the bottom right is daily. Its a pretty good indication of a trend if all of those three time frames converge and look similar. The steeper the trend line gets, as you can see below, the more bullish the trend may be. Traders looking to jump on the side of this trend may look for a dip to get pick up a long option strategy. For more information on Options, TRADEPRO Academy has an Options course that covers all profitable options strategies.

Futures trend identification – Swing Trading Strategies

Next off, we’ve got futures, the trend can be seen in a similar way. Below we’ve got a 1hour time frame chart on Gold, the reason we like a lower time frame on Futures is because of high leverage in futures. Traders are not recommended to take dollars worth of stop losses because, on Gold for example $0.10 on one contract is equivalent to a $10 move. So that means if you have a swing position of 5 contracts, and your stop loss is $1.00, that is a $500 loss right there. Now imagine you treated this position as a stock and the stop was $5.00, that is a $2500 loss.

That is why we like to look at 4h, 1h or 30m time frames on futures markets. The trend here on Gold is pretty easy to identify it is more or less range bound. A trick all you traders should take on is looking at volume on moves. For example, if the price is coming into one of your resistance levels and the volume is increasing on the way up, there is likelihood of a break of that resistance level. For more information, TRADEPRO Academy has developed an extensive Futures course. 

Forex trend identification- Swing Trading Strategies

Finally, we’re moving onto Forex, and identifying the trend in Forex. A similar process holds in this situation as it did for the previous two examples. As you will notice, there are three time frames as there were in the equity trend tracking example. The time frames you choose on Forex are however different and depend on how long you plan on trading the position for. Below we have a daily (far left), 4h (top right), 1h (bottom right). In identifying the trend in Forex, we look for convergence among all of the time frames. The daily is in a down trend of a channel, moving over to the 4h, it is in a similar down channel although not as clear. Lastly the 1h looks the other two as well, meaning we can establish the general trend of the currency pair is bearish, so traders might look for selling opportunities. A swing trading Forex course and strategy has developed by TRADEPRO Academy based on both indicators and price action.

Swing Trading Strategies: Step 3 – Finding Low Risk, High Opportunity Levels

Once traders have identified the direction of the trend, the next step would be identifying an entry for a high probability trade. This is the harder part of process. This is where other factors come into play, such as price action, volume, moving averages, and other endless indicators. A lot which could be noise. In this portion of the article we will glance over some general points to watch out for when looking for that high probability, low risk trade. For more information on the topic, check out our website.

Equity (Option) trade qualification- Swing Trading Strategies

Once a trader has identified the general trend of the move, its easier to jump into a smaller time frame (daily) to identify entries. We recommend having level set up from previous strong support and resistances levels. Below we’ve pasted a daily chart of Alibaba’s stock BABA. All of the charts are on a daily time frame. The difference is that they all have different indicators on them. Finding the highest probability on an equity trade encompasses price action, volume and the right choice of indicators.

Using Alibaba as an example, The yellow faded box identifies the short entry we qualified a while back as we waited for price to break beneath the strong support on high volume. The retrace was picked up on the way up for the short. In situations such as this, its important to note the volume and momentum indicators as the price gets into your level. Volume was weak as it was climbing into our short zone and the momentum indicators held bearish. Solidifying our short.

Futures trade qualification- Swing Trading Strategies

Identifying a high probability Futures swing trade opportunity is similar to that of a stock entry! We rely on volume and price action. Emphasis on volume! Another difference between Options and Futures high probability opportunity qualification is the time frame. On a Futures basis, we like to look at a 1h or 4h time frame due to leverage and risk management parameters. Rather than on a daily basis.

Below we have a chart of the S&P 500 E-mini futures on a 1h time frame. The volatile swings on an intraday justifies the need for such a smaller time frame on a risk management perspective. When it comes to identifying the high probability and low risk trade entry. Traders are urged to look at how volume starts to react when price approaches their level. Watching order flow and volume on Futures swing trading is vital. For example, the most recent move on today’s session as price approached our resistance level marked at 2940-2945 we looked at volume. The buy volume leading into this resistance was weak.

Meaning there is a higher probability chance the sellers would take over at this level. In futures traders should be aware of the head fake and previous levels. A head fake can fill a trade only to take the stop loss before going in your direction. Making sure your stop loss is just above a previous high resistance ensures a higher probability trade. This accounts for the head fake too, because the entry on the trade would be higher than originally

Forex trade qualification- Swing Trading Strategies

Forex trading and trade qualification for the highest probability trade is a little different than for Options or Futures. That is because there is no volume shown in Forex trading. So that means we have to rely on price action and indicators to find those winning trades.

Below you will see a USD/CAD chart, the same chart as from above. First and foremost, Forex is notorious for head fakes so traders beware of those entries. What we like to do is scale down into smaller time frames when it comes trade location. A break of a support level, drawn on the daily, is basis for our short entry. Then looking into the 4h we want to see the chart displaying a similar story. The smaller the time frame gets, you will notice the periods of consolidation or rotation before a move. The ideal trade set up would be price coming into our drawn resistance, consolidating then making a press lower. Head fakes and wicks work well in Forex, so look out for points like that. A print of a few wicked candles at a support or resistance level could be a high probability reversal trade.

Swing Trading Strategies: Conclusion

Conclusively, we have gone through three main markets to trade on a swing trading basis. Options, Futures and Forex. They all have their unique trading styles and criteria for higher probability trade set ups. But all should be considered no matter if you trade just one of the three. TRADEPRO Academy has developed extensive courses on all three of the aforementioned markets.

The process we’ve gone through today is deciding on a market to trade, identifying the trend and finding the higher probability low risk trade entry. This will keep risk management tight and in check which will lead to successful trading. For more information on these trading styles, check out our YouTube page and Website.

If you want to join us in our live trading room, check out the Day Trader package here >

If you prefer to trade more passively, checkout our newsletter, trade ideas and live analysis in the Swing Trader package here >

The information contained in this post is solely for educational purposes, and does not constitute investment advice. The risk of trading in securities markets can be substantial. You should carefully consider if engaging in such activity is suitable to your own financial situation. TRADEPRO Academy is not responsible for any liabilities arising as a result of your market involvement or individual trade activities.