Ok, “best” is subjective. But this is my favorite swing trading strategy, mainly because it captures some explosive stock trades. There is a common price pattern that tends to occur before many stocks rally sharply. This pattern can be used as a strategy because it provides:
• A defined entry point.
• A stop loss that can often be placed within several percent of the entry point, keeping risk on the trade small.
• A favorable reward-to-risk opportunity, in that we only take trades where the likely profit is much bigger than our risk.
In this article, I will lay out how this all works, what the pattern is, how to trade it, and how to find it.
I have also noticed that the Trade Triangles can be used in conjunction with this strategy, providing alternative entry points and signaling when to take profit off the table. Therefore, you can continue to use the MarketClub Trade Triangles, or you can add them to the strategy to aid with your trade selection. Continue reading "The Best Price Action Swing Trading Strategy"
By: Cory Mitchell, founder of VantagePointTrading.com
Whether I'm day trading or swing trading forex (and other markets as well), I frequently use the method described below. It's a price action trading method, with trendlines and trend channels used to help establish entry points and potential targets. Here's the basic strategy; adjust it to your liking or add your own indicators to help you implement it.
Before Placing Trades
Before placing a trade, calculate your proper position size. Position size is calibrated for the trade so you are risking 1% (or less) of your account capital on each trade. All trades taken must have at least a 2:1 reward:risk ratio, but often we'll end up with trades that have a 5:1 or 6:1 ratio (more on that in a bit). If risking 1% of your account, you stand to make at least 2%, but often 5% or more...that's 5% on your total account, not just traded capital (because our risk is also based on the total account). If you risk up to 2% per trade, your gains double.
Before commencing trade, note any significant economic data coming out over the next 24-hours. Avoid placing entries or stop loss orders close the current price right before a major news announcement, as this can cause slippage. Best to avoid those trades. Continue reading "My Favorite Swing Trading Strategy"