In trading, many aspiring traders are looking forward to some strategies that they can apply in order to be consistent in profits. The perception of the market makes it emotionally overwhelming and sometimes confusing. This makes many end up losing rather than gaining money. Many new traders go confused, not knowing what the best strategies for swing trading are and how to apply them efficiently. As a result, such lack of understanding happens to prevent such traders from bringing out their complete potential, especially when markets are impulsive.
This article is meant to share with the reader actionable insights into swing trading. It will focus on the real-world setups from professional traders of proprietary trading firms. In analyzing recent market movements, and thus tearing apart specific trade setups in a real world, we can make sense of the swing trading process and arm traders with the knowledge they need to make rational choices. Such setups will be culled from high-volatility stocks and other securities that are currently generating buzz in the trading community.
We present successful swing trade setups used by professional traders, with entries and exits, as well as methods of risk management, and market conditions affecting such trades. From understanding these approaches, a trader will be better enabled to implement his trade with greater confidence and improved results within the process of trading.
What is Swing Trading?
Swing trading is a type of trading that is designed to catch the price moves within a relatively short period, usually between a few days to several weeks. It contrasts with day trading in that positions are opened and closed during the trading session, but with swing trading, one can make use of bigger market movements without the pressure to act quickly. A good technical analysis that understands technical analysis and market sentiment would be very important in managing risk well.
Presenting Possible Configurations
Traders should start with screening the market for the stocks that have great volumes of volatility because often it precedes possible price shifts.
- Technical Indicators: MA, RSI, Bollinger Bands, etc. They might provide hints on possible entry and exit points.
- Chart Patterns: Flag, pennant, and head and shoulders patterns are worth noticing since they might signal future price movements.
- Volume Analysis: Utilize volume surges, which tend to precede major price movements.
Best Swing Trades for the Upcoming Week
- FFI (FFI Inc.)
Over the past few days, FFI has come to the forefront of looking like a very promising trade candidate. Last week, FFI demonstrated parabolic moves, making it one of the best opportunities for taking profits and short selling.
- Entry Point: Look to enter at about the $1.00 mark where it had proven very strong resistance.
- Exit Strategy: Watch out for a pop back to $2.20 to $2.30 and get your take profits going when you approach these levels.
- Risk Management: Set the orders to sell on stop losses above the high of the day in order to limit exposure if the trade does not pan out as expected.
- CRKN or Cracken Corp
CRKN also gained sympathy with FFI, making it a decent swing trade.
- Entry Point: Enter when the stock hits two-day VWAP (Volume Weighted Average Price).
- Exit Strategy: This is a trading stock that likes to swing back to former support levels.
- Risk Management: Strict stop-loss policy, do not forget to get out if the trade is against you.
- BABA (Alibaba Group)
BABA appears to be a pullback candidate after the recent run-up.
- What to Look For: Watch for a consolidative period for two to three days and ideally $85 to $90.
- Exit Strategy: Long entry following stabilization. Profit take at $95.
- Risk Management: Trailing stop to lock in your profits when upward movement occurs; whether it can continue is uncertain.
- GameStop and AMC
Both GameStop and AMC are in the limelight because of the last few days’ volatility that have already given ways to entry opportunities in both longs and shorts.
- Entry Point: Look for higher low formation compared to Friday’s Low. This indicates a probable move upwards.
- Exit Strategy: Plan to see a relief bounce in the near term, targeting a move up to $30 to $35.
- Risk Management: Tight stop-loss orders must be placed as these two stocks have experienced serious volatility in the past.
Why Risk Management?
With trading, risk management can never be overemphasized, particularly when trading swing trades. The best traders always keep capital and mental focus on the highest-probability setups and avoid the temptation of spreading themselves too thin. Here are some key strategies for effective risk management:
- Set Clear Stop-Loss Levels: Always define how much you are willing to lose before entering a trade.
- Position Sizing: Position risk according to your risk appetite and asset volatility.
- Adhere to a Trading Plan: Tie yourself down to not overtrade and set strict adherence to a trading plan not to be tempted to jumping into a wrong trade.
In a nutshell, the swing trading approach could be very profitable if handled with discipline and proper strategy in mind. With strong emphasis on real-life swing trade settings and effective risk management techniques implemented, traders should at least hope to have a better chance of succeeding in the ever-changing market landscape.
Consider these set-ups as we head into this new trading week and adapt to fit your markets, otherwise move with easy perfection while being nimble, agile, and observant always to focus on probability in every single one of your trades.