Why Price Action Trading Really Complements Swing Trading

If you wan’t to be a swing trader, I really do hope you learn price action trading, because it really complements it.

Here’s how: price action helps you in finding better trade entries. Price action trading  leaves you clues like bearish and bullish reversal candlesticks which can be used as your sell and buy signals.

Here’s how:

  • in a uptrend, when you see a bullish reversal candlestick in a downswing, it can be used a buy signal. These are the type of bullish reversal candlesticks you should be looking for:

bullish-candlesticks-for-swing-trading

  • in a downtrend, when you see a bearish reversal candlestick in an upswing, it can be used as a sell signal. These are the types of bearish reversal candlesticks you should be looking for:

bearish-candlesticks-for-swing-trading

6 Disadvantages of Swing Trading

  1. Some new forex traders can find swing trading difficult to learn and do or it may not fit the trading personality of the trader.
  2. swing trading can take a lot of time when you are analyzing your trading setups especially if you are new to trading forex.
  3. swing trading setups generally tend to form in larger timeframes like the 4hr, daily, weekly and you can wait a long time before the setup happens to take a trade.
  4. swing trading is not necessarily a set and forget system, you have to monitor your trades regularly to move stop loss to break even, move trailing stop etc.
  5. a swing trader can get so attached to a trade because he may be in that trade for a while and instead of exiting and taking profits, his attachment can cloud his judgment
  6. As in day trading, trading discipline and risk management as well as keeping emotions in check are very important.  It is not uncommon for swing traders to exit on a retrace or trend change only to have the market immediately change back and head in the original direction and to be quite honest, this is sometimes very frustrating.

8 Advantages of Swing Trading

These are the reasons that make swing trading appealing to many forex traders:

  1. with swing trading, it is easy to manage take profits and stop loses because you can actually place your stop loss a bit further away from the market price to avoid getting stopped out prematurely and also your take profit targets a place a bit further away so that your risk to reward ratio are 1:2 or higher.
  2. swing trading is much easier to learn and do than day trading
  3. trading transaction costs due to spread are much lower than that of day trading because of less trades placed.
  4. you have a lot more time to analyse trades and then take trades and therefore swing trading can suit someone who has a day job.
  5. swing trading does not take a lot of your time…you can place your trade and walk away instead of baby sitting your trade like in day trading.
  6. Swing trading is much less stressful than day trading.
  7.  Profits made a much larger than in day trading because you let your trades run of more than 1 day so the chance of increased profit much greater than in day trading.
  8. Swing trading allows swing traders to ride out the trend for maximum profit extraction using this best trailing stop technique 
  9. the use of price action trading with swing trading really enhances the trade entres and exits.

I wrote a post that looks at swing trading vs day trading and you can look at it here.

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