Swing trading is a popular strategy among CFD traders. Professionals, as well as intermediates, widely use this strategy. In many cases, the experts suggest the newbies use this style if they have a moderate understanding of the CFD technical indicators. Many newbies often ask which indicators are considered the best for swing traders and which are the best for making consistent profit.
Don’t get confused because we are here to answer your question. Here, we will disclose the best indicators for these traders.
What is swing trading?
It is a popular trading strategy among Forex investors. The beginners want to make profits from the swings of the market price. In this platform, it is always a tension between the bearish and bullish trend, which means that there is oscillation. Newbies have to identify the oscillation and grab the chance to make profit.
In the case of the timeframe, it has to be said that there is no specific duration for this method because you can either retain it and sell the currency after a day or can sell it after a couple of weeks. It depends on a notable swing. There are two kinds of rhythms that can be seen here –
- Rhythm highs: When the price touches the highest value before it starts moving down, it is considered to be the rhythm high. This point is an ideal chance for a shorter trade.
- Rhythm lows: When the price of a currency reaches the lowest value before it starts moving up, it is regarded as the rhythm lows. This is a good opportunity to begin a long trade.
Therefore, you have to remember that you have to keep a close eye on the breakouts and trends while using this fluctuation as your style. Trends are like a longer move and contain a short oscillation. In contrast, the breakout indicates that there is a possibility of starting a new trend. Read some articles at Saxo Bank to learn more about the trend. Once you know the importance of trend, CFD trading will become easier and you can easily secure your financial freedom.
Best indicators for the swing traders
- Moving averages (MA)
Moving averages can be of two types – simple moving average and exponential moving average. To use it in the best way, you have to choose two different timeframes, such as 50-day and 100-day, or 100-day or 200-day. Therefore, there will be two different moving average lines in the chart. Use these lines and their interceptions to identify potential opportunities.
When the short-term line intercepts the long-term line, the interception point is called a crossover. The bullish or bearish move can be quickly assessed by observing the point and the movement.
This is another important and useful tool to determine a trend. The principle behind this indicator is relatively easy. If a trend has a higher volume, there is a possibility that it will be a stronger one. On the other hand, if the volume is lower, the movement may be weaker. For the breakout strategy, observing the volume can be a better method.
- Relative strength index
This is also called RSI, which outlines the possible oscillations in the wider flow. This is why this indicator is prevalent among the rhythm investors. One can easily determine whether the currency is overbought or oversold. To evaluate this, you have to calculate the RSI value, which generally ranges from 0 to 100. A lesser value (<30) indicates that the market is in the oversold region, while a value greater than 70 signifies that the market is overbought.
These are the three most powerful indicators for swing traders. Therefore, as a beginner, you can use them to develop this strategy and know more about this. Remember that this is a potential trading style. A novice can use this method to make money quickly, but at first, he must study these indicators more to learn how to apply them.