In the forex faq this week, we have a question from one of our fellow traders asking me the below question:
What is the best trading system which is stress free for swing trading?
For this question, I will like to break it into 2 parts so that I can better answer your question. In the first part, I will talk about the component you need to have a good swing strategy. In the second part, I will talk about how to trade stress free for whatever strategy you are using.
Part 1: Component to make a good swing strategy
Just in case some of you do not know what is swing trading, it is actually the trading of the market trying to profit from the change in direction of price.
In order to do it effectively, you will need to know how to draw a proper trend line, how to identify levels of strong support and resistance as well as when is the best time to trade.
First, the swing strategy works best where the market is more volatile. Therefore I will recommend you to trade during the London Open and New York Open session as the price is more volatile during these 2 sessions.
For the price to change its direction to produce the swing, it must have hit a level of strong support or resistance. Therefore you must have the ability to identify such a level.
I will suggest you to make use of the Pivot Point and Fibonacci Indicator to help you identify such a level where the price will respect and get repelled by it.
If you are not so familiar with these 2 indicators, you can take a look at some of the posts that I have written before
Lastly, you will need to wait for the price to produce a valid breakout of the trend line before you enter a trend. Therefore you must know how to draw a good trend line.
With the above 3 components, you will be able to trade swing strategy with better winning percentage.
Part 2: How to trade stress free
The only way you can trade stress free is to have a proven strategy that works. If your strategy has been making you money for the past 12 months or so, you will not feel any stress when you enter a trade as you have absolute confidence that you will make profits from the strategy by the end of the month.
Irregardless of whether the trade ended up as a winner or loser, you believe that it will produce more winning trades than losing trades which will make you profits by the end of the month.
Therefore I will suggest you to try out your strategy on a demo account first until you are able to get 2 to 3 consecutive months of profits from it before you go live.
Once you manage to get 2 to 3 months of profits on a demo account, you will have more confidence in your strategy and therefore will be able to trade stress free.
If not, there is no way you can trade without any stress.
I hope that I have answered your question and do feel free to give your comments regarding my answer at the bottom of this post.