Swing Trading Strategies

Using Swing Trading Strategies and Technical Analysis when Trading Stocks to Make Consistent Trading Profits.

This article is one small part of a series of lessons using Swing Trading Strategies and Technical Analysis developed by WD Gann which are designed to show how anyone can build a profitable Stock or Commodity trading business from scratch.

Swing charts can be a valuable technical analysis tool in determining the trend of any market or Stock and assisting with entry and exit levels for your trades.

Firstly some basic ground rules for those of you who are unfamiliar with swing charts and swing trading.

WD Gann is credited with bringing swing charting methods into prominence may years ago, and he used swing trading extensively along with his forecasting skills to profit from the market.

Please study the first chart below. I have drawn the swings of the market over the bar chart so you can see how a swing chart is drawn. Charts available at StockTradingReview.com.

The line on a daily swing chart goes up to the highest point of the daily bars each day until a daily low is broken, then goes down to the low of each bar until a daily high is broken. Pretty simple.

An inside day has no effect on the swing chart - the swing line simply stays where it is until a daily high or low is broken.

An outside day affects a swing chart in different ways, depending on the price action of the market.

If the price rallies first, making a new daily high, then falls and makes a new daily low, the swing chart goes to the top of the high bar first and then to the low of the day.

If the price first goes down and breaks a daily low, then rallies to make a new daily high on the same day, the swing chart goes down to the low of the day, then goes up to the high of the day.

Every one of us must develop our own system of analysis that we are comfortable with, based on what we learn from other traders, and then we must take every trade that system signals. If we start to second guess our system, we may as well throw it away and just stick with our day job.

Make a decision to develop a system you are happy with, whether it involves the Swing Trading methods or not, and commit to taking 20 trade set-ups no matter what, firstly on paper until you gain confidence, then if you are making paper profits, using real cash.

Then follow your rules to the letter. This will give you an objective measure of how profitable your system is and whether it is right for you.

If you can enter a trade and hold a position overnight while still being able to sleep, your plan is sound. If not, you may need to reduce the size of your position or adjust your plan is some other way.

The large profits come from identifying a strongly trending market and taking multiple positions with that trend. This naturally involves holding overnight, sometimes for many nights.