5 Profitable Swing Trading Strategies for Beginners

Profitable swing trading strategies are a prerequisite to profitable swing trading. Swing trading is a popular and profitable trading style. It involves buying and holding a stock or other financial instrument for a few days to a few weeks. However, it is important to use top swing trading strategies to maximize the odds of success.

If you are a beginner and want to learn about profitable swing trading strategies for beginners, then you are on the right platform. In this article, we are going to provide an overview of 5 profitable swing trading strategies for beginners. Let’s begin right away.

5 profitable swing trading strategies for beginners

1. Trend following

Trend following strategy is among the best swing trading strategies for beginners. It involves identifying a trend in the market and riding it for as long as possible. The objective of the strategy is to seek profit from short-term price movements within the context of a longer-term trend. Typically, traders use technical indicators such as moving averages, trendlines, and the relative strength index (RSI) to identify a trend. Once a trend is identified, traders can enter long positions and hold them until the trend reverses. 

Here are some steps for beginners looking to use trend following as a swing trading strategy. 

1. Identify the trend: The first step in trend following is identifying the trend. You can do this with the help of technical analysis tools such as moving averages, trendlines, and chart patterns. 
2. Set entry and exit points: After identifying the trend, you should look for entry and exit points that are consistent with the trend.
3. Manage risk: Risk management is an important aspect of swing trading. You should never risk more than you can afford to lose and should always use proper position sizing to ensure that your losses are limited.
4. Monitor the trade: After opening a trade, you should monitor it closely to ensure that it remains consistent with the trend.
5. Practice and refine: As with any trading strategy, practice, and refinement are key to success. Therefore, keep backtesting and refining your strategy to make it even better.

2. Breakout trading 

Breakout trading strategy involves identifying a stock or other financial instrument that is trading in a range and waiting for it to break out of that range. Again, breakout traders also use technical indicators such as Bollinger Bands or support and resistance levels to identify the range. Once the stock breaks out of the range, traders can enter a long position and hold it until the trend reverses. Breakout trading is a low-risk strategy. It is because you’re only buying or selling when the asset breaks out of its trading range. Thus, you can limit your losses if the breakout fails and the price moves back into the range.

Here are some steps for beginners looking to use the breakout strategy as a swing trading strategy. 

1. Identify a trading range: Firstly, you need to identify a trading range for the security of your choice. This range is the price range within which the asset has been trading for a period of time. 
2. Set up buy or sell orders: Secondly, you can set up buy or sell orders at the boundaries of that range you identified in the first step. 
3. Place stop-loss order: You should always use stop-loss orders to limit your losses if the price moves against you.

3. Pullback trading

A pullback trading strategy involves identifying a security that has pulled back from its recent high and waiting for it to bounce back. Traders can use technical indicators such as Fibonacci retracements or moving averages to identify the pullback. Once the stock bounces back, traders can enter a long position and hold it until the trend reverses.

Here are some tips for beginners who want to use pullback trading as a swing trading strategy.

1. Identify the trend: Firstly, you need to identify a trend. Look at the price action and determine whether the trend is up, down, or sideways. 
2. Wait for the pullback: Secondly, wait for the market to experience a pullback or retracement after identifying the trend.
3. Look for signs of a reversal: As the market pulls back, look for signs that the trend is about to resume. This could include bullish candlestick patterns, higher highs, higher lows, or a bounce off a key support level.
4. Enter the market: Finally, enter the market with a long or short position, depending on the direction of the trend.
5. Place your stop loss and take profit: Always use a stop loss to limit your risk. Moreover, take profits at predefined levels. 

4. Gap and Go swing trading strategy

Gap and Go is also among the most popular swing trading strategies. Swing traders use it to capture quick profits in the financial market. Firstly, Gap and Go strategy involves identifying stocks that have a significant gap between the previous day’s closing price and the current day’s opening price. Secondly, it involves buying the stock with the intention of selling it later in the day.

Here are the steps to follow when using the Gap and Go swing trading strategy.

1. Identify assets with a gap in prices: Firstly, you need to identify assets that have a significant gap between the previous day’s closing price and the current day’s opening price. Ideally, the gap should be at least 2% or more.
2. Set a buy order: Secondly, set a buy order above the high of the first 15 minutes of trading. This is to ensure that you enter the trade only if the stock continues to move in the direction of the gap.
3. Set a stop-loss order: Thirdly, set a stop-loss order just below the low of the first 15 minutes of trading to limit your losses if the stock starts to move against you.
4. Take profit: Finally, set a profit target based on the stock’s volatility and the amount of risk you are willing to take. 

5. The Fibonacci retracement swing trading strategy 

The Fibonacci retracement swing trading strategy is also a highly useful strategy. It involves identifying support and resistance levels for security using Fibonacci ratios. 

Here are the steps to follow when using the Fibonacci retracement swing trading strategy.

1. Identify the swing high and swing low: The first step is to identify the most recent swing high and swing low points in the price chart of the asset you want to trade. 
2. Draw the Fibonacci Retracement Levels: Secondly, draw the Fibonacci retracement levels. You can draw these levels by placing the Fibonacci retracement tool on the swing high and swing low points.
3. Identify entry and exit points: The next step is to identify the entry and exit points. For instance, you can enter a long position when the price retraces to a Fibonacci retracement level and bounces back up. Similarly, you can exit the trade when the price reaches the next Fibonacci retracement level or a predetermined target level. 
4. Manage risk as with any trading strategy: Finally, it is important to manage risk. You can use stop-loss orders to limit your potential losses if the price moves against your trade. Additionally, you can also use trailing stop orders to lock in profits if the price moves in your favor.

The wrap-up

It’s important to remember that swing trading can be risky, and it’s important to manage your risk carefully. Traders should always use stop-loss orders to limit their losses if a trade goes against them. Additionally, it’s important to have a solid understanding of technical analysis and risk management before beginning swing trading.