Quote from austinp:
Well, in all reality, last year was a swing trader's dream market too. Just about all market periods allow viable swing trade action regardless. It's more of a mindset than technical nuts & bolts.
FX markets offer +200 pip to +400 pip moves in the major pairs several times per month on average. A retail trader only needs to catch one of those, that's it. The ES offers +20pt and NQ +50pt swing moves couple times to several times per week, week after week thru all market conditions.
The key to consistently successful swing trading is patience for the right setups. Above all else, targeting the first pullback following direction change is the high-odds setup for all markets in all conditions, period.
Also, swing traders take advantage of gaps in their favor, whereas pure day traders usually miss out on gap moves overnight. Most gaps occur in the middle of swing = trend moves, very seldom at the turns. Gaps that happen at the turns tend to fill as pullbacks.
Lastly, swing traders can trade spreads (pairs) without stops or great concern for blow-out losses. Long NQ / Short ES off expected lows can position for huge gains in an uptrend with hedged loss potential. Opposite is true in a downtrend... NQ tends to overshoot ES both ways.
Short front-month commodities and long the same market's back-month contracts takes advantage of frothy peaks and troughs. When grains went insane last year, shorting the front and buying the back of beans, corn, wheat hedged = muted further upside risk to shorts while holding positions in the overheated front-month contract. Same was true for crude oil, natty gas, copper, etc.
I'm a day-trader and no plans to cease that any time soon. But I have made the decision to add swing trades in FX and either directional or spread swing trades in commodities, too. Just like the prop guys who run several different strategies, a swing trader can monitor numerous positions off 15min to 60min charts with ease.
Spread trades have the bonus of lowest margin requirements of all and least downside risk of loss. Not eliminated, but greatest controlled... hence the lowest margins required. A small-account trader would probably have best possible chance for success either spreading grain complex futures or mini-size FX contracts.
Spreading soybeans with expected directional bias against corn as the hedge or GBPUSD with expected direction against EURUSD are two pairs that profit from more dynamic symbol when right, greatly limit net loss when wrong versus outright longs or shorts.
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Swing trading ain't free money... but it sure beats micro-scalping the ES for $3.50 per contract profits on averaged turn, imo.
