In today forex faq, we have a question from one of our fellow readers asking me about swing trading indicators.
Below is the question:
what the best indicator for swing trade?
First of all, let me just do a quick elaboration of what is swing trade. Swing trade is a style of trading to capture the change of movement in the market.
A change of movement does not necessarily means a change in trend. Swing trading can also be applied to a retracement of price movement.
As long as you see a V or N shaped pattern, it is a kind of swing movement.
However if you were to enter a trade whenever you see a swing movement, you will lost a lot of money. Therefore you will need to have a way to validate your trading opportunity to see if it is a false movement or not.
In this post, I will be sharing with you some swing trading indicators that you can use for your trading.
1) Trend Line – Whenever you trade, you must have a trend line to help you to look for entry. A trend line is a good support and resistance level and it is one of the most important indicator for swing trading.
2) MACD Indicator – In order to better trade the swing, you will need the help of an oscillating indicator.
Therefore I will recommend that you use the MACD indicator as it is one of the best indicator in my own opinion.
You can make use of the MACD divergence or the MACD crossover to help you improve your trading accuracy.
Below is an article I have written on MACD Divergence
Below is an article I have written on MACD Crossover
3) RSI Indicator – The RSI is another oscillating indicator you can consider for swing trading. This is an indicator that will show you whether the market is overbought or oversold.
This will increase your winning percentage if you use it properly.
Below is an article that I have written on RSI
The above are a few indicators you can use to improve your winning accuracy in trading the swing.
However I will still suggest that you test out different combination of them on a demo account first. You will then slowly fine tune the setting of the indicators to improve the winning percentage. You cannot just trade based on one trend line break or crossover as you will get into a lot of false alarm trade.
The below is one good example of a false alarm trade
Below is an article that I have written to show you how to formulate and fine tune a strategy
Do feel free to email me at [email protected] if you have any other questions