Now that you have covered the fundamentals of swing trading:
- trends and trend identification
- upswings and down swings in a trend
The next big question is how do swing traders enter a trade? You know that a swing trade can be opened and can last a minimum of 2 days to a handful of weeks, so how do swing traders actually enter a trade? What kind of trading methods do they use?
It is generally accepted that:
- swing traders like to enter trades at really low risk, high reward entry points.
In an ideal situation, this is what I’m talking about:
- a swing trader would enter a trade in an uptrend market just when the downswing is ending so he can profit in the uptrend move on the next upswing.
- similarly, in a down trending market, the swing trader would enter a trade just when the up swing is ending so that on the next down swing, he can profit quickly as the price moves down.
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The chart below shows an example of a market in an uptrend and price doing its upswings and downswings. The very point where the downswing ends is the best buying entry point for a swing trader:
That really makes sense, doesn’t it? Yes it does!