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Top 7 Swing Trading Strategies for Maximum Profits and Minimal Risk

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When I started out as a newbie stock trader 25 years ago, the first thing I needed to figure out was my preferred trading time frame. How long did I want to hold my stock trades?

Caught up in the excitement of the dot-com bubble, I initially started out as a day trader. However, I soon switched to a less stressful trading style known as “swing trading,” after I discovered the benefits of swing trading vs. day trading.

As a swing trader, I knew I would be holding stocks for several days to weeks (rather than a few minutes to hours). However, I was clueless about the different types of swing trading strategies to actually follow. How would I determine which stocks to trade and when to buy or sell?

I initially attempted to go at it alone, through trial and error, but that was a big mistake that led to lots of headaches and costly trading losses. So, after donating plenty of tuition at the “school of hard knocks,” I finally decided to stop wasting time and money. It was time to start investing in my trading education and learning a proven swing trading strategy that actually worked.

I began my journey for the best swing trading strategy by reading books on various techniques and hanging out in trading forums (no social media in those ancient days).

I started testing different techniques and analyzing my results. I spent countless hours poring over charts and crunching numbers, always trying to find ways to improve my performance. I was finally on the path to developing my own winning swing trading system (which eventually led to the 2002 creation of MTG).

If you’re a trader or investor on a similar journey to find the trading strategy that’s right for you, we’ve got you covered.

Continue reading to learn about the top 7 types of swing trading strategies, and which one may be right for you.


What is a Swing Trading Strategy?

A swing trading strategy refers to a set of guidelines or rules that a swing trader follows when taking positions in the market, with the goal of profiting from price changes over a period of several days or weeks.

The specific types of swing trading strategies may vary greatly, but typically involve technical and fundamental analysis to identify trade opportunities and the right time to enter or exit positions.

A swing trading strategy is designed to take advantage of short-term price movements in the market. It is used by traders who do not have the time or inclination to closely monitor the market on an intraday basis, nor are interested in long-term holding periods.

Traders who use swing trading strategies may focus on a specific market or financial instrument, such as stocks, crypto, options, currencies, and commodities.

Overall, the goal of a swing trading strategy is to maximize profits from short-term price movements, while minimizing risk in the market.

7 Best Types of Swing Trading Strategies

There are several different techniques that traders can use for swing trading. Some of the most common swing trading methodologies include:

1. Trend-following

Also known as “trend trading,” this popular strategy seeks to identify a stock in an uptrend or downtrend, then enter a position in the direction of the trend (ie. buying an uptrend or selling short a downtrend). Traders using a trend-following technique use technical analysis indicators, such as moving averages and trend lines, to identify trend direction and to determine when to enter and exit positions.

2. Breakout trading

This technique focuses on buying stocks that are breaking out of a trading range, then taking a position in the direction of the breakout. As with trend-following, this strategy relies heavily on technical analysis tools, including volume and chart patterns, to spot breakouts and know the right time to buy and sell.

3. Pullback trading

Breakout traders (#2) can easily miss a fast-moving breakout—especially in a raging bull market. Rather than riskily chasing the price higher, astute breakout traders patiently wait for the stock to retrace to a short-term support level. The first pullback after a breakout often provides a lower-risk entry point that leads to similar results as buying the breakout.

4. Momentum trading

The momentum trading strategy targets stocks that are showing strong price momentum and increasing volume. Relative strength trading is a highly reliable type of momentum trading. Technical indicators such as Relative Strength Index (RSI) and Moving Average Convergence Divergence (MACD) is also used to identify momentum and to determine when to enter and exit a trade.

5. Mean reversion

This type of trading involves identifying a stock that is sharply diverging away from its historical average price, then taking a position with the expectation that the stock will eventually return to the mean. Mean reversion traders typically use statistical tools such as Bollinger Bands to find stocks that are trading outside of their normal ranges, then determining when to buy and sell.

6. Arbitrage

The arbitrage strategy involves taking advantage of discrepancies in the price of a stock in different markets, or between different financial instruments. For example, a trader might buy a stock in the cash market and simultaneously sell a futures contract on the same stock. A profit is realized by the difference in prices.

7. News-based trading

Traders who employ a news-based trading strategy enter trades based on the release of important news or events that are expected to affect the price of a stock. Unlike the other methodologies above, news-based trading combines fundamental analysis and technical analysis to spot ideal trade setups that are primed for news-driven moves.

Additionally, note that some swing trading strategies achieve the best results by using a combination of the above trading techniques.

The MTG swing trading strategy, for example, is a trend-trading system that seeks to profit from explosive breakouts and lower-risk pullbacks in leading growth stocks. In certain market conditions, our methodology also focuses on momentum trading.

Overall, any strategy for swing trading can be lucrative if it enables you to correctly identify and capitalize on price changes in the market. However, it is important to realize that all swing trading strategies carry their own set of risks. Always carefully evaluate your trades and manage risk accordingly.

How can I start swing trading? 7 simple steps to get started

Starting swing trading can be a great way to generate income as a side hustle and potentially grow your wealth, but it’s important to approach it with a solid plan and realistic expectations.

Here are 7 steps you can take to start swing trading:

Educate yourself: Before you start swing trading, it’s important to educate yourself about the markets and the different strategies and indicators that are commonly used. There are many resources available online, such as books, articles, and tutorials, that can help you learn more about swing trading. The Wagner Daily PRO servicemay be the perfect solution for you, regardless of your experience level. Press here to learn more about it.
Develop a trading plan: Develop a trading plan that includes your goals, risk management strategies, and entry and exit criteria. This will help you stay focused and disciplined while trading.
Paper trade: Before you start trading with real money, it’s a good idea to practice using a “paper trading” account. This will allow you to test your strategies and get a feel for the markets without risking any real money.
Choose a brokerage: Once you’re ready to start trading with real money, you’ll need to choose a brokerage. Look for a reputable brokerage that offers a trading platform with real-time quotes and technical charting capabilities. TradeStation and Interactive Brokers are two such popular options.
Start Small: Start with a small amount of capital, and only invest what you can afford to lose. As you gain experience and confidence, you can gradually increase the amount of capital you invest.
Monitor your trades: Keep track of your trades, and review them regularly to identify any areas where you can improve. This will help you learn from your successes and mistakes, and become a more successful trader over time.
Continuously educate yourself: Markets and strategies are constantly changing, so it is important to continuously educate yourself and adapt to the new market conditions. Our swing trading blog is a great resource to continually build on your swing trading education.

It’s important to remember that swing trading is not a means to getting rich quick. Rather, successful trading requires a high degree of both patience and discipline.

The myth of the “holy grail”

Many newer traders are on a quest for the “holy grail”—that one secret technique that will crack the code and lead to massive riches in the stock market.

So which of the swing trading strategies above is the holy grail?

None! The perfect swing trading system does not exist, as each has its pros and cons.

Rather, the best trading strategy is any strategy you can easily follow to generate consistent profits, while properly managing risk.

A profitable strategy that is too difficult to correctly follow is useless. Likewise, a winning system that carries too much risk should also be avoided, since clearly defined risk per trade is a hallmark of successful swing trading.

In other words, there is no “one size fits all.” Rather, the ideal swing trading strategy is simply a matter of what YOU are most comfortable with.

If you’re a new swing trader, consider risking a small amount of capital to try out different strategies. Take some time to discover which technique suits your personality the best.

The Morpheus swing trading system is perfect for many traders because it is a calm, end-of-day trading strategy (the perfect side hustle) designed to work in all market conditions. It is focused on scoring explosive gains in bull markets, while staying safe (protecting capital) in bear markets.

The proven MTG swing trading strategy used in The Wagner Daily report has been shared with over 70,000 traders and investors since 2002, so why not give it a try?

Press here to find out more and to start receiving the best stock swing trade alerts with a simple, “no nonsense” trading strategy that works. If you have any questions, just press the chat icon on this page.

FAQ: Frequently Asked Questions about Swing Trading Strategies

Which strategy is best for swing trading?

There is no one-size-fits-all strategy for swing trading, as it largely depends on your individual risk tolerance and investment goals. However, a trend-following strategy based on technical indicators is one of the most popular types of swing trading strategies.

This includes technical swing trading techniques such as breakouts, pullback buying, and momentum trading. Many of these methods for combined and integrated with the use of candlestick charting for further technical insight.

How profitable can swing trading be?

Swing trading can be a consistently profitable side hustle, and can even lead to a full-time career. However, the profitability of swing trading varies widely, and depends primarily on a trader’s skills, strategies, and risk management practices.

Of course, the size of an individual’s trading account plays a huge role in the amount of profits that can be earned. Additionally, the markets are always changing and what works well in one market environment may not work as well in another.

Which indicator is best for swing trading?

There is no one indicator that is considered the “best” for swing trading, as different indicators may be more suitable for different traders and market conditions.

At MTG, we prefer a simple swing trading method based primarily on price, volume, relative strength, and support/resistance levels (moving averages). Other swing traders may also utilize more complex technical indicators such as Bollinger Bands, MACD, and RSI.

Note that no single indicator can give a complete picture of the market. As such, many traders combine multiple indicators and chart patterns to provide a more comprehensive analysis.

Can I get rich swing trading?

Swing trading can be a great way to generate income, but it is not a get-rich-quick scheme. While It is possible to make significant profits through swing trading, it’s important to have realistic expectations.

It takes time, patience, discipline, and a strong understanding of the markets to be successful. Consistently profitable swing traders typically have a solid strategy, a well-defined risk management plan, and the ability to control their emotions while trading.

Is Swing Trading Risky?

Any style of trading, from day trading to position trading, carries a certain level of risk. The markets are inherently unpredictable, and there is always the possibility of losing money. However, the level of risk can be managed through proper risk management techniques and having a well-defined trading plan.

Swing trading typically involves holding positions for a few days to a few weeks, which means that the level of risk may be lower than a day trading or scalping style, where positions are held for a very short period of time. However, swing trading strategies may carry a higher risk of market-moving news events outside of market hours.

What is swing trading?

Swing trading is a style of trading where investors hold positions for a period of a few days to weeks, with the goal of profiting from price movements in the markets. The goal of swing trading is to identify short-term trends in the markets, and to profit from buying low and selling high, as the stock price “swings” up and down. Press here to learn about the pros and cons of swing trading, and how it compares to day trading.

What are the risks of swing trading?

All styles of trading carry a certain degree of risk. Specific risks associated with all swing trading strategies include: market risk, volatility risk, liquidity risk, emotional risk, and personal risk management of positions.

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