Swing Trading Trends -Knowing When To Enter The Trend

Trend is your friend

Trend is your friend. You must have heard it too often. Swing trading trend is one of the most profitable strategies that traders use. When a trend starts, once you have made the entry, you don't have to do a lot to manage your trade. If it is an uptrend, the price will continue to rise and in case it is a downtrend, price will steadily fall. As compared to range trading, trend trading is more profitable. Ride the trend as long as it lasts.Entering a trend early in the first few days allows you to enter when the risk is lowest. Entering a trend when it is already weeks or months old raises the chance of your getting on when you should have been getting off. The difficulty in trend trading lies in identifying when a trend has started and knowing when to get off quickly when the trend is over.So the biggest risk for a trader engaged in swing trading trend lies in the possibility of entering a trend when it is just about to end. Someone has described this phenomenon of entering late in the trend as like a dog chasing speeding cars. It may be fun for sometimes but eventually the dog will get run over by a speeding car.You need to learn how to minimize your risk of riding a crashing trend. You need to develop a swing trading system that lets you only enter trends at the right time and stops you from riding trends about to end. How do you identify that you are about to ride a beginning trend or an ending trend?ADX ( Average Directional Index) is ideal in identifying the strength of the trend. If the reading is above 20, the trend is going strong. Below 20 means there is no trend, the market is consolidating. You can use candlestick patterns like the doji, the hanging man, the hammer, the engulfing patterns and others even to spot start of a new trend or end of an existing trend. This will put the odds in your favor. Hey, trading is all about putting the odds in your favor. It is not like gambling. You do take risk in trading but the risk is calculated and measured. It is not something that can ruin you.Moving Averages are also used extensively in trend trading along with Moving Average Convergence and Divergence. There are many method to enter and exit the trend. You have to select one that makes you comfortable. You can wait for the trend to pause a little, trying to consolidate and only enter on the day of strength or weakness. But combination of candlestick patterns with indicators is the most powerful that many traders use.


Swing Trading Trends -Knowing When To Enter The Trend

By: Stacey Zimmerman

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