Swing Trading Strategy Using Price Action

It is subjective to determine what is “best.” Swing Trading Strategy is most useful statergy for swing traders.

The reason I like this swing trading strategy so much is that it allows me to take advantage of some explosive stock trades. Many stocks tend to display a common pattern of price movement before they rally strongly. There are several advantages to using this pattern as a strategy:

  • The entry point is clearly defined.
  • Stop losses can often be placed within a few percent of the entry point, reducing risk on the trade.
  • A high chance of profit-to-risk ratio, in which we only take on trades where our likely profit exceeds our risk.

This article will show you how to trade it, how to find it, and how to see the pattern. Also within this strategy, I noticed that Trade Triangles could be used to provide alternative entry points as well as a signal when to take profits off the table. In other words, you can use MarketClub Trade Triangles to aid in your trade selection or you can even add them to the strategy.

Price action for Swing Trading Strategy

One of my favorite price action strategies for stocks is a contraction pattern.

After a strong uptrend, the price must experience at least two declines, with the second decline being smaller than the first. This shows that selling momentum is declining. But that’s good news because we are looking for a chance to buy this stock when it starts moving again.

Ideally, after a decline (or more), the price should return to near the high of the uptrend.

Therefore, the pattern consists of at least two declines, with the latter smaller than the first. After each decline, the price rallies back to near the highs. Then, after the price drops at least twice and then moves back to high, I watch for the price to move sideways for a few days within a small range. It is known as consolidation.

As soon as the price moves over the high point of the range/consolidation, I buy.

Note: Ascending or symmetric triangles are often found in the pattern.

Also read

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