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Range/Swing Trading Strategy: Beginners Guide

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Avatar for Ashma
Written by   472
1 year ago

In the last article, we looked into Momentum Uptrend strategy. We saw step by step guide to implement the strategy, some other important points which need to be taken care of and then implemented strategy on historic chart as an example, you can read that here

So, most of the traders love trends either it is be uptrend or downtrend, making money out of trend is easy and if you managed to get involved at early stage of trend then it is very profitable but there is one drawback for trend traders, according to the study (unknown) it is found that any asset can be in the trend for at most 30% of the time, sounds boring isn't it? Nah, actually it's really fun if you know how to use swing trading. So in this article we will look into swing trading strategy, discuss some key points and we will see analysis of historic chart.

So let's dive in !!

What is Swing/Range Trading?

So the definition is,'A trading strategy that seeks to identify and capitalize on coins trading in price channels'. I don't know who & why defined this non understandable definition. So forget it and let me explain what this means in details.

When a particular coin with strong support and resistance keeps ranging between that price channel, a trader can take advantage of that swinging nature of coins and buy at support and sell at resistance and also open short position if trader is okay to take that extra risk. Many institutional traders like Wall Street traders loves range trading and hate sudden breaks like which happens in trends.

What indicators can be used for this strategy?

Identifying proper support & resistance is the most important aspect of this strategy but there are few technical indicators which can be used to get price confirmations & increase the accuracy.

The list of technical indicators includes Relative Strength Index (RSI), stochastic oscillator and commodity channel index (CCI). A trader can use these indicators to confirm the oversold as well as the overbought condition when the price is swinging between the range.

Steps to Implement Strategy

Step 1: Find the coins with neutral chart in short & medium term and in uptrend in long term scale.

Step 2: Identify strong support and resistance & connect them to horizontal trendlines to form zones.

Step 3: Buy at support & sell at resistance

Step 4: For more confirmations a trader can use Relative Strength Index (RSI) to see whether the coin is overbought or oversold.

So this is it, just follow those four steps properly and you are ready to become a swing trader, congratulations!!

Important Things To Consider

1) Make sure you pick the coin with neutral chart in short-medium term and probably a uptrend in long term, high market cap coins always fits perfect in this scenario (at the time of writing this article XRP, BNB & CEL tokens are on my list)

2) Take your time to learn identifying strong support and resistance zones and also give some time to market to confirm your predicted zones, don't hurry.

3) Longer timeframes like 4 hour or one day chart are suitable for most of the strategies, so work on them instead of shorter timeframes.

4) Try out everything in demo, practice and then enter the market.

Note : You can try Stormgain, where you get unlimited demo coins for trading or use their free mining feature to get real money to trade.

Example : Historic Chart Analysis

Now as you get the idea how this strategy works let's see how it was implemented on historic chart of EOS

Now from point 1,3 & 2,4 a trader can see a strong resistance and support zone respectively is established. Now the trader can easily put limit order to open positions when the price touches to support and close positions when price touches resistance.

A future or options trader can use this strategy to go with short positions but there is risk of resistance break, if trader is okay to take that risk and manage his/her risk-reward ration properly then this strategy can be very profitable. To minimize this risk and confirm the price bounces a trader can use some of the technical indicators like the RSI is used here in the chart below

Here a trader can confirm the overbought or oversold condition using Relative Strength Index (RSI) to be more sure on opening positions and make most out of the trade.


My other articles related to trading:

Basic Trading Term (Part-1)

Types of Trading Orders


So this is it, I hope you guys liked this article and found it informative. Keep in touch and get notified for my future articles by subscribing me @Ashma or follow me on noise @Ashma

Thanks for reading 🙏

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Avatar for Ashma
Written by   472
1 year ago
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Comments

Thank you for this. I'm learning now. By the way, how many strategies are there? I've read your Bollinger Bands and this.

$ 0.01
1 year ago

Hey first of sorry for late reply. I'm not that active here lately. And talking about strategies there lot of 'default' or say traditional strategies, literally lot of them 😅 but every strategy has to manipulate and change some factors according to the market. For example if one strategy work on Forex may not work on stocks & cryptos, sometimes every coin could have its own strategy

$ 0.00
1 year ago

I am going to re-read this later. My brain does not work right now 😂 Saved. Thanks.

$ 0.00
1 year ago

Hahaha, yup :) read it later otherwise, there won't be any gain from reading

$ 0.00
1 year ago

So in short, the Swing trade means depending on the support and resistance (if it is strong) and grab the opportunity to have a profit? Am I right?


Sometimes I'm using it haha, now I know that it is swing trading.

$ 0.00
1 year ago

Yup, you are right :) If you making profit out of it then you are doing right otherwise use technical indicators just to confirm your positions

$ 0.00
1 year ago

I'm not a professional trader but I also have little knowledge about this. Thanks for the info man!

$ 0.00
1 year ago

Hahaha neither me, I'm just learning and trying regularly. Glad to see you find this article informative 😊

$ 0.00
1 year ago

So am I haha! Yeah, always trying to learn something new everytime.

$ 0.00
1 year ago

Yup :) that's what take to improve

$ 0.00
1 year ago

I'm gonna read it later. I will save it for a while. Thank you for this guide 😇💚

$ 0.00
1 year ago

Yup, definitely read it in your free time!! And you're welcome glad you find it helpful 😊

$ 0.00
1 year ago