A flag can be seen on a bullish or bearish trend, it is a slight pause in trend, giving the formation of a flag and a long pole either from the top or bottom.

The flag usually has an M or W shape inside the flat pattern. It signals an entry when it breaks out of the pattern. The Head and shoulder reversal chart pattern contains three peaks: the outer two shoulders can be the same height or skewed, but the center which is the head is higher. To get a full free PDF of how to identify entry and exit points, kindly see the Asia forex mentor forex patterns pdf guide.

To know price action, market structure , and exit strategy you must first know what price action is. To understand the general market structure, traders need to look at patterns and identify key chart patterns, support and resistance levels, and indicators that can cause a significant change in the overall market direction. Many traders utilize a variety of price action tactics to predict market moves and profit in the near term. The pin bar pattern is symbolic of a candle with a long wick.

The idea is that the price will continue to move in the opposite direction of the tail, and traders will use this information to decide whether to go long or short.

This trend follows any large market moves, assuming that a price surge would be followed by a correction. A breakout occurs when a market goes outside of a designated support or resistance level.

To calculate the current EMA, the trader must first calculate the SMA, then calculate the multiplier for smoothing factor of the previous EMA and only then — the current EMA. A swing trader will pinpoint the baseline on the chart using the EMA and hold the position when the stock is in an uptrend. They will short at the baseline once the trend reverses. The baseline is used for confirmation when trading. Whenever the market is more volatile, the trader might wait out the downtrend, despite it hitting the baseline.

This means keeping the position even as it dips, hoping for a stronger uptrend. Ichimoku Kinkō Hyō AAL was developed by a Japanese journalist Goichi Hosoda in the late s. The man perfected the system for 30 years before officially releasing it in Over the last two decades, the system has seen wide rates of adoption and has grown a loyal fanbase.

Traders around the World are attracted by the versatility of the tool. The Ichimoku Clouds contain more data than your basic candlestick charts. These lines work in synergy and create a reference tool for trading decision making. Four lines are calculated by using the high and low points of the previous two sessions. The data changes depending on the variable period lengths, time shifting in either direction by 26 periods. The fifth line is generated by time shifting the current closing price point by these periods.

The resulting lines resemble clouds, giving the system its name. The Ichimoku system is often used in conjunction with Time Theory, Target Price Theory and Wave Movement Theory to further increase the accuracy of the strategy. The clouds are called Kumo. They mark where the trend is headed. Long exposure is preferred when the price is above the clouds and the reverse applies when it dips below. Dips and pullbacks are used for determining entry points for a trade. The conversion line, called Tenkan Span, along with the baseline Kijun Span provides more entry and exit signals.

These two are used to navigate within the existing trends. The price movements along these lines generate momentum-based signals that point to increased momentum suitable for entry or for strengthening the established positions.

The lagging span, called Chikou Span shows a trader the price pattern 26 periods in the past. This feature allows the investor to track and compare the previous month of price movements with the existing patterns. The line is also a clear trend signal. When the line is situated above the current price pattern, it signals a bull trend. The larger the distance between the price and the line is, the higher the trend momentum is. A small separation or a crossover point to low trend inertia.

Ichimoku Clouds is an extremely efficient, multi-layered trend analysis tool. The system creates a single, easily digestible graphic image to help a trader make investment decisions.

The tool offers information on the price, trend type, momentum, entry and exit points all in one fell swoop. The indicator is highly versatile and provides reliable data both going forwards and backwards in time in any time frame.

This makes Ichimoku Clouds a highly recommended tool for swing traders who seek to bring their expertise levels to a professional degree. Trading is simple in essence. You buy a position, hold it for a certain amount of time and sell. The differences and complications between trading strategies come into play when the specific time frame is concerned.

People like Warren Buffett will buy rising assets and hold onto them for decades, collecting dividends and watching their net worth grow. Others will be unwilling to take years-long risks and seek short-term gains to their portfolio. This is where the issues arise. In order for a position to become meaningful and profitable, its price needs to grow quickly enough and large enough to counteract the transaction and operational costs along the way.

But a short-term swing trader can. A smaller portfolio provides certain freedoms when trading. Naturally, the payoff is directly proportionate to the investment, but as a smaller trader, one might get more opportunities to act upon.

The indicators such a trader will employ are technical tools that filter usable information out of stock chart price patterns.

Needless to say, such actions are inherently speculative. However, if the swing trader is lucky enough, these indicators can provide decent profit margins when gathered and implemented effectively. The essence of this theory is relatively uncomplicated. On-balance volume indicators explore the connection between the volume of shares traded and their price.

If the number of traded shares in a particular stock is exploding, but the price is unchanged, this indicates an untenable position. The indicator assumes that since the interest in the stock is rising, the price will follow. Therefore, the number of people who sell is keeping up with the number of buyers. In order to arrive at an on-balance volume, we start at a random point in time.

The following day the price rises by any amount and the trading volumes reach shares. This sets the on-balance volume indicator at If on the third day, the price dips and shares are exchanged between investors, the on-balance volume will become Repeat this method for an infinity of time periods using the same principle.

On-balance volume based trading is used pretty much only in short-term decision making. When the price rises, while on-balance volume is lowered, the trader buys in. When the price falls but the volume rises — he sells the position. This indicator examines the latest closing prices compared to previous ones. Minus the closing price a couple days ago. Now the trader will divide the number by the old price, arriving at 0. The further from 0 the final number is, the stronger the uptrend will appear.

The price rate of change clocking in at a higher figure is an indicator to buy and vice versa. The commodity channel index is an oscillator that explores the relationship between current pricing and the supposed norms.

Developed by Donald Lambert in , this particular indicator is a tad more complicated but still employs basic mathematics at its core. You calculate this number by averaging the high points, low points and closing numbers of the price chart. The calculation can occur over any specific time period. A stock that opens at 5 USD, reaches 9 USD, plummets down to 5 and ends the period at 7 produces a price average of 7 USD.

The second part implies subtracting the SMA over the same time frame. Our fictional stock closed at 7 USD on Monday, 6 on Tuesday, 5 and Wednesday, 7 on Thursday and 9 on Friday. This leaves us with the SMA of 6.

That, in turn, leaves us with a 0. We must now produce the mean absolute deviation. Then we simply divide the amount by 5, arriving at the mean absolute deviation. The constant serves for universal scaling. If the CCI returns a number over , the indicator implies to buy. If the number is below , you sell. Mostly, the oscillator will recommend neither of these actions.

The index is therefore only usable in certain instances. Technical and fundamental research, crafting a perfect strategy, applying leverage, stop-losses etc. This means no sudden risks, no impulse buys, no irrational attachment to trades. As a swing trader, you need to always be prepared. You must keep track of the entry and exit points and the money you might lose or gain.

A swing trader must never hesitate to execute his exit plan. You already had those potential losses accounted for. If you pull the cord on a winning position in a strong uptrend, so what?

You already made the money you intended to make on this trade. Stick to the game plan and enjoy the plunder. Humans have yet to create an all-encompassing, faultless analytical tool that gives consistently high-probability indicators to buy, sell or hold a position. Devising such a system might very well be beyond our capacity at least in the foreseeable future. Professionals of the industry and beyond are constantly working on bettering the tools we have at hand. Meanwhile, the strategies and tools we discussed represent the existing methodology of analysing price fluctuations and mountains of data to help investors make better decisions with their money.

Swing trading offers a wide range of tools, tactics and strategies to choose from. Approaches that have been developed over decades of the trading market evolving, progressing, crashing and rising from the ashes. Once you have narrowed down the number of pairs to just a few viable trade setups, then you could start analyzing which trade to take and which trades should be skipped. This process usually just takes less than an hour to accomplish, making it suitable for new traders who are trading part-time.

This is perfect for those who have a full-time job or are attending school but are willing to spare an hour or two to trade. For now, you could keep your day job while you are still mastering the craft of trading the forex markets.

We have compiled five swing trading strategies that could work well for you. Trading with the long-term trend is a proven way to trade the market. This is especially true with swing trading.

The higher timeframes are where most institutional traders who are position traders play. These traders trade based on fundamental analysis and widely used technical indicators which they know other institutional traders are also looking at. This also includes long-term trend indicators. This is also where most swing and position traders base their trade direction on.

Getting this right on the higher timeframes usually means winning half the battle. The other half of the battle pertains to timing the entry. Now, there are many ways to time an entry. However, most of it is based on a confluence of several conditions. Usually it is about aligning the mid-term trend with the short-term trend or a momentum signal. The Fisher Arrows Forex Swing Trading Strategy is a strategy which provides trade signals based on the confluence of the mid-term trend and a momentum signal, while at the same time trading in the direction of the long-term trend.

The Fisher indicator is an oscillating indicator which helps identify trend direction. This method allows the indicator to indicate how far price has moved from the mean as well as show the peaks and troughs within a trend. The indicator indicates trend by displaying histogram bars. Positive bars indicate a bullish trend while negative bars indicate a bearish trend. This makes the indicator very useful as a trend filter indicator. However, crossovers from negative to positive or vice versa could also be interpreted as a trend reversal signal.

Lukas Arrows and Curves is a custom indicator which provides trade entry signals. These signals are based on momentum price movements. The Lukas Arrows and Curves indicator draws two lines on the price chart. One line above the other, forming a channel. This indicator also paints arrows on the price chart indicating an entry signal whenever it detects a momentum reversal.

These signals are based on the closing of price beyond the channel, which is indicative of a strong momentum candle. This strategy aligns its trades with the long-term trend, which is based on the Simple Moving Average SMA. Trades are taken in the direction where price is in relation to the SMA. Aside from this, the SMA should also be sloping in the same direction.

The mid-term trend is based on the Fisher indicator. The mid-term trend should be aligned with the long-term trend based on whether the Fisher histogram bars are positive or negative.

Finally, the entry signal will be based on momentum shifts. These momentum signals will be provided by the Lukas Arrows and Curves indicator by printing arrows indicating the entry candle. Many momentum-based trade signals are effective when traded on the 4-hour and daily charts. This is because traders would often take cues coming from the previous trading session. For example, traders who trade on the New York open would often take cues coming from the London session.

This is often in line with the 4-hour and daily charts. This is what makes momentum signals quite effective on these timeframes.

There are times when price would temporarily chop around on the lower timeframes after the trade signal is taken. However, traders would often still take cues coming from a momentum signal which would often result in a trending market condition. A sound trade management skill is also necessary on these timeframes. Swing trading allows traders to leave the trading station often.

However, even on these timeframes, price movement is still unpredictable. For this reason, traders should learn to trail the stop loss effectively in order to ensure profits instead of giving it back to the market. You might have heard that trading charts are fractal. This means that the same patterns and behaviors occur again and again across different timeframes.

To some extent this is true, but there are limitations to this. If it were totally true, then any strategy that would work on the 1-minute timeframe should also work on a daily chart. If you have observed currencies on both charts, you would know that this is not always the case. Components within a strategy, such as price action, indicators, or filters, should match the timeframes that you are trading on. There are indicators that work well on the 1-minute chart but is totally rubbish on the 5-minute chart.

There are also strategies that work on the daily charts and the 4-hour charts but does not make any sense on the minute chart. This strategy makes use of a very popular trading indicator that works well for swing trading.

It is not perfect, but it does bring in some pips. The Moving Average Convergence and Divergence MACD is a widely used technical indicator. In fact, many professional technical analysts use this indicator. This is probably why the MACD seems to be very effective on the higher timeframes. It tends to lag too much. The Zero Lag MACD is a modified version of the MACD. It is tweaked to adjust for the lag in order to provide traders a timelier indication of what the market is doing.

This indicator works much like the regular MACD. It displays a line and histogram bars. The histogram bars represent the traditional MACD line, which is the difference between two moving averages. The line represents the Signal Line, which is a moving average derived from the histogram bars. Crossovers between the histogram bars and the signal line serve as an early indication of a probable reversal. These crossovers usually occur when the market is overextended based on the MACD indicator.

Crossovers of the bars over the midline is another trend reversal signal. It may be a little more delayed compared to the histogram and signal line crossover, but it is more reliable. The ASC Trend indicator is a custom indicator which provides trade entry signals based on breakouts. It prints arrows on the price chart to signify an entry signal pointing towards the direction of the trend reversal. This indicator is very simple yet very effective. Although it is not perfect, it tends to produce an accurate entry signal.

It is even more effective when paired with a complementary indicator which could help filter out bad trades. However, instead of taking every trend reversal signal that is presented, this strategy filters out trades that goes against the flow of the long-term trend. The period Simple Moving Average SMA will be used as the long-term trend filter.

Trades will only be taken in the direction of the trend based on the SMA. Trend direction is filtered based on where price is in relation to the SMA and the slope of the SMA. On the Zero Lag MACD, trend reversal entries will be based on the crossing over of the histogram bars from negative to positive or vice versa.

On the other hand, trade exits will be based on the reversal of the Signal Line towards the middle of the Zero Lag MACD range. This allows traders to enter on a confirmed trend reversal and exit early at the start of a probable mean reversal. Finally, the specific entry candle will be based on the ASC Trend indicator. This would allow traders to have an accurate entry, which is confirmed by a momentum-based reversal. This trading strategy is one that works very well.

It is not perfect, but it does work well. It produces high probability trade setups that would result in a good win ratio. Although this strategy is very systematic, it would also help to have a confluence of other factors that could support the trade.

It could either be breakouts of supports and resistances, confluence with a higher timeframe trend, or divergences. These confluences improve the probability of the trade setups much further. Although there are times when price would surge resulting in huge gains, there will also be times when the gains are not that big. On these scenarios, it is best to stick to the plan instead of allowing greed to cause you to hold the trade too long. There are also times when the exit signal from the Zero Lag MACD signal line is a bit too early and could cause traders to exit the trade even before the end of the trend.

Conservative traders should exit trades whenever the signal line is showing signs of reversal. However, aggressive traders could opt to hold the trade even longer until it is clear that the market is reversing.

Swing trading is a convenient way to trade the forex market for most people, especially those who are just starting to trade part-time. It does not require traders to be glued on their trading stations the whole day. Instead, most swing trading strategies do not require more than a couple of hours a day. This is just to look for viable trade setups among the forex pairs that you are trading. It usually just takes a few minutes to decide whether a forex pair is worth looking at.

Once you have narrowed down the number of pairs to just a few viable trade setups, then you could start analyzing which trade to take and which trades should be skipped. This process usually just takes less than an hour to accomplish, making it suitable for new traders who are trading part-time. This is perfect for those who have a full-time job or are attending school but are willing to spare an hour or two to trade.

For now, you could keep your day job while you are still mastering the craft of trading the forex markets. We have compiled five swing trading strategies that could work well for you. Trading with the long-term trend is a proven way to trade the market. This is especially true with swing trading. The higher timeframes are where most institutional traders who are position traders play.

These traders trade based on fundamental analysis and widely used technical indicators which they know other institutional traders are also looking at.

This also includes long-term trend indicators. This is also where most swing and position traders base their trade direction on.

Getting this right on the higher timeframes usually means winning half the battle. The other half of the battle pertains to timing the entry. Now, there are many ways to time an entry. However, most of it is based on a confluence of several conditions. Usually it is about aligning the mid-term trend with the short-term trend or a momentum signal. The Fisher Arrows Forex Swing Trading Strategy is a strategy which provides trade signals based on the confluence of the mid-term trend and a momentum signal, while at the same time trading in the direction of the long-term trend.

The Fisher indicator is an oscillating indicator which helps identify trend direction. This method allows the indicator to indicate how far price has moved from the mean as well as show the peaks and troughs within a trend. The indicator indicates trend by displaying histogram bars.

Positive bars indicate a bullish trend while negative bars indicate a bearish trend. This makes the indicator very useful as a trend filter indicator. However, crossovers from negative to positive or vice versa could also be interpreted as a trend reversal signal. Lukas Arrows and Curves is a custom indicator which provides trade entry signals. These signals are based on momentum price movements.

The Lukas Arrows and Curves indicator draws two lines on the price chart. One line above the other, forming a channel. This indicator also paints arrows on the price chart indicating an entry signal whenever it detects a momentum reversal. These signals are based on the closing of price beyond the channel, which is indicative of a strong momentum candle.

This strategy aligns its trades with the long-term trend, which is based on the Simple Moving Average SMA. Trades are taken in the direction where price is in relation to the SMA. Aside from this, the SMA should also be sloping in the same direction.

The mid-term trend is based on the Fisher indicator. The mid-term trend should be aligned with the long-term trend based on whether the Fisher histogram bars are positive or negative. Finally, the entry signal will be based on momentum shifts. These momentum signals will be provided by the Lukas Arrows and Curves indicator by printing arrows indicating the entry candle. Many momentum-based trade signals are effective when traded on the 4-hour and daily charts.

This is because traders would often take cues coming from the previous trading session. For example, traders who trade on the New York open would often take cues coming from the London session. This is often in line with the 4-hour and daily charts. This is what makes momentum signals quite effective on these timeframes. There are times when price would temporarily chop around on the lower timeframes after the trade signal is taken.

However, traders would often still take cues coming from a momentum signal which would often result in a trending market condition. A sound trade management skill is also necessary on these timeframes. Swing trading allows traders to leave the trading station often. However, even on these timeframes, price movement is still unpredictable. For this reason, traders should learn to trail the stop loss effectively in order to ensure profits instead of giving it back to the market. You might have heard that trading charts are fractal.

This means that the same patterns and behaviors occur again and again across different timeframes. To some extent this is true, but there are limitations to this. If it were totally true, then any strategy that would work on the 1-minute timeframe should also work on a daily chart.

If you have observed currencies on both charts, you would know that this is not always the case. Components within a strategy, such as price action, indicators, or filters, should match the timeframes that you are trading on.

There are indicators that work well on the 1-minute chart but is totally rubbish on the 5-minute chart. There are also strategies that work on the daily charts and the 4-hour charts but does not make any sense on the minute chart.

This strategy makes use of a very popular trading indicator that works well for swing trading. It is not perfect, but it does bring in some pips.

The Moving Average Convergence and Divergence MACD is a widely used technical indicator. In fact, many professional technical analysts use this indicator.

This is probably why the MACD seems to be very effective on the higher timeframes. It tends to lag too much. The Zero Lag MACD is a modified version of the MACD. It is tweaked to adjust for the lag in order to provide traders a timelier indication of what the market is doing. This indicator works much like the regular MACD. It displays a line and histogram bars. The histogram bars represent the traditional MACD line, which is the difference between two moving averages. The line represents the Signal Line, which is a moving average derived from the histogram bars.

Crossovers between the histogram bars and the signal line serve as an early indication of a probable reversal. These crossovers usually occur when the market is overextended based on the MACD indicator.

Crossovers of the bars over the midline is another trend reversal signal. It may be a little more delayed compared to the histogram and signal line crossover, but it is more reliable. The ASC Trend indicator is a custom indicator which provides trade entry signals based on breakouts. It prints arrows on the price chart to signify an entry signal pointing towards the direction of the trend reversal.

This indicator is very simple yet very effective. Although it is not perfect, it tends to produce an accurate entry signal. It is even more effective when paired with a complementary indicator which could help filter out bad trades.

However, instead of taking every trend reversal signal that is presented, this strategy filters out trades that goes against the flow of the long-term trend. The period Simple Moving Average SMA will be used as the long-term trend filter. Trades will only be taken in the direction of the trend based on the SMA. Trend direction is filtered based on where price is in relation to the SMA and the slope of the SMA.

On the Zero Lag MACD, trend reversal entries will be based on the crossing over of the histogram bars from negative to positive or vice versa. On the other hand, trade exits will be based on the reversal of the Signal Line towards the middle of the Zero Lag MACD range.

This allows traders to enter on a confirmed trend reversal and exit early at the start of a probable mean reversal. Finally, the specific entry candle will be based on the ASC Trend indicator. This would allow traders to have an accurate entry, which is confirmed by a momentum-based reversal. This trading strategy is one that works very well. It is not perfect, but it does work well. It produces high probability trade setups that would result in a good win ratio.

Although this strategy is very systematic, it would also help to have a confluence of other factors that could support the trade. It could either be breakouts of supports and resistances, confluence with a higher timeframe trend, or divergences. These confluences improve the probability of the trade setups much further. Although there are times when price would surge resulting in huge gains, there will also be times when the gains are not that big. On these scenarios, it is best to stick to the plan instead of allowing greed to cause you to hold the trade too long.

There are also times when the exit signal from the Zero Lag MACD signal line is a bit too early and could cause traders to exit the trade even before the end of the trend.

FCA, CySEC, ASIC. Swing Trading Strategy 8: CCI Moving Average Forex Trading Strategy The CCI Moving Avearge Forex Trading Strategy is another forex trading strategy which can also be easily adapted by a swing trader as a swing trading strategy. Both of these approaches have their pros and cons. If you pull the cord on a winning position in a strong uptrend, so what? Clearly identifiable swings in pricing characterise these stocks in a healthy market. Cons: As a disclaimer, please take into consider that CFDs are only available. If it were totally true, then any strategy that would work on the 1-minute timeframe should also work on a daily chart.

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