Swings in the market can offer great opportunities for profit, but in order to take advantage of these swings, you’ll need to know how to utilise swing trading indicators. It’s important to find indicators that can help you identify reversals and trend changes more confidently and in this article we’ll discuss some of the best TradingView indicators for swing trading and how they can improve your strategy.
What is Swing Trading?
Swing Trading is a strategy that focuses on taking gains in short to medium term trends and cutting losses quickly. Swing Trading positions are usually held a few days to a couple of weeks, but can be held longer.
Unlike day-trading strategies, swing trading strategies don’t require all positions to be closed by the end of the day. Instead, they hold trades for as long as the current momentum lasts, which could be anything from under an hour to several days.
The two swings to look out for are swing highs and swing lows. Swing high refers to a market hitting its peak before retracing, giving opportunity for a short trade. Swing low refers to the opposite – when the market hits a support level and bounces, giving opportunity for a long trade.
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1. Relative Strength Index (RSI)
The Relative Strength Index (RSI) is one of the most popular momentum oscillators that measures the speed and change of price movements and indicates whether a market is overbought or oversold (and therefore likely to ‘swing’). The RSI value oscillates between zero and 100, but is said to be overbought when above 70 (a good indication to open a short position), and oversold at 30 (a good indication to go long). When you see an increase in the value of your stock on a relative basis it means that it has gained more than its peers in terms of percentage gain per unit time, while a decline indicates a drop in performance compared to other stocks. Relative Strength Index can be used as a standalone indicator or in conjunction with other indicators. It is one of the most commonly used oscillators and has many uses for swing traders.
2. Stochastic Oscillator (Stoch/RSI)
As the name suggests, Stochastic oscillator helps you to determine overbought and oversold conditions in the market. It is a momentum indicator that calculates the closing price of the current period and helps predict future prices. The Stochastic Oscillator is plotted as two lines: one line plots changes in closing prices while another line plots its difference from a simple moving average. The faster it falls below its signal line, the faster it falls below its signal line and vice versa for an uptrending market. If both lines move away from each other, then this indicates that there are no longer any trends present in your data series since both lines indicate increasing volatility at their extremes (i.e., high or low). It is useful in finding both entry and exit points for trades, making it one of the best tradingview indicators for swing trading.
3. Moving Averages (MA & SMA)
Swing trading is based on the premise that markets tend to move in cycles, rising and falling over time. These swings can be predicted by using moving averages, which are indicators that show how volatile a market is at any given point in time.
The value area is the area between the moving average and the price. It’s a good place to look for potential trades because it shows where the market is likely to be in the near future, which means that you could use this information to make an educated guess about when it would be most profitable for you to enter or exit your trade.
The moving average crossover is also a useful tool for swing traders. This is when the short-term moving average crosses over the long-term moving average. This signal indicates that a change in trend has occurred, and it’s a great way to time your trades. The shorter-term moving average will catch up with and then pass the longer-term one. This signals that new activity has accelerated, while old activity is slowing down.
If you want to use the best indicator for swing trading then MDX ALGO combines all of the best TradingView indicators mentioned above – simply switch to Swing Mode settings on the indicator and by using MDX ALGO, you can make more informed, data-driven trades over short, medium and long-term timeframes, limiting your risk factors and increase profits.
