If you have ever dedicated yourself to trade the stock market, or have simply observed closely the daily or hourly charts for a selected stock, you have doubtless spotted that the price does not go straight up or down, it fluctuates in wave like sort of pattern.
These fluctuations in the price, if it is going up or down are called swings, and they have an inclination to repeat themselves with a fixed level of similarity.
Indeed, these patterns are somewhat constant, however, fundamentals with a high impact on the market can affect and change these patterns taking the cost of the stock out of the range signaled by the pattern.
However, what will occur in a case like that, is that you’ll perhaps take losses, but it won’t matter ( and it should stock because trading the stock or currency market is not about trading without ever losing, but trading with a high level of consistency, which basically means taking lots of winning trades against some losers.
Therefore, since the market moves the same way the majority of the time, this suggests that the majority of the time you can use the constant swings in the cost of stocks, that may enable to enter when the price is hitting a support (if you are going long) and the high of the swing.
These patterns can be identified through the use of many indicators. I especially like to set the charts with candlesticks, and the add the Bollinger Bands plus the Stochastic Oscillator, which will tell me when the price could be bottoming. Or use a trading system like Ultimate Swing Trader.
However, as much as the use of these indicators are sometimes a useful way of determining when a stock is bottoming, and so when it might be a nice time to buy, the difficulty is that doing that all by yourself involves following each stock for a couple of days to catch the right candlestick formation.
The problem is that the market has many thousand corporations that trade in public, making of humanly impossible to follow every one of them, so unless you have some sort of assistance.
Therefore, what I have done to clear up this problem is that I have gotten a trading tool (a software) designed precisely to identify these swing trading opportunities (e.g. Ultimate Swing Trader), and based on the changes I get from the software, I pick what I consider to the best trades for the day.
This way I get to analyze (actually not me, the software) the entire market five days each week, and I get several good trading ideas almost every day which gives me which gives me masses of occasions to keep my money moving and growing steadily thru tiny small gains each 3-6 days (which is mostly the amount of days you will hold a position ) .
This software is generally very accurate, which means it usually signals trades that end up with a gain ( it basically tells you when to buy and sell ), so even if you aren’t yet acquainted with indicators, you may use it safely to swing trade the stockmarket. Just ensure you do your math when determining the size of each trade to avoid your brokers’ commission eating up your profits.
For related trading articles and resource, check out this link below:
5EMAs Forex System – A Useful Forex Strategy?