Swing Trading System

Any Swing Trading System involves shorter time frames than the daily charts; this generally means trading from the 240, 60, and 15 minute charts. The time you could be in a swing trade can range from hours to days, and the trade can be a trend trade or a counter-trend trade. Often swing trades are counter-trend trades as they take advantage of the secondary moves that often follow extended impulsive (trend) moves.


The term swing trade comes from the trader’s action of swinging long or short. Swing traders in general are less concerned with long-term trends than with waiting for setups or patterns on the chart that they recognize. Some swing traders are in the market all the time as they take every buy and sell signal in their trading plan. They know that although they will have losers (draw-downs), by being properly capitalized and using sound money management, they will be in a position to catch the biggest moves.


Swing traders, like all technical traders, always should have stops placed that are based on a percentage of the account size or risk capital and structure on the chart. Like position traders, swing traders need to keep their stops far enough away from price to avoid being knocked out of positions prematurely by day-to-day volatility and must be willing to hold their trades through scheduled fundamental news releases.

There are probably nearly as many swing trading systems employed in the markets as there are traders who use them successfully. The one thing they all have in common is that they trade higher time frames than day traders do, and it matters little to them whether they are long or short or are going with or against the long-term trend. Because they have to check their positions only periodically, they don’t have to be on the screen when they are in the market, though they do need to be able to monitor their positions and look at charts occasionally to gauge their strategies. These are the traders who can make trading decisions on the basis of a look at a chart on a portable device or cell phone or have the computer send their cell phones an alert or text message when the price gets to a certain level or a technical indicator gives a signal they rely on. They also rely on trailing stops and OCO (order cancels order) orders and other automated features on current trading platforms.