If you are a trader with some idea about how this platform works, then you must have heard about swing high and swing low. This is one of the many strategies that traders use to look for better deals while entering and exiting a trade. While trading, traders always look for new ways to survive in this rapidly fluctuating market. And to survive, they have adopted as well as came up with new strategies.
A trader requires to learn about these value areas to identify the price range of a financial commodity. If one fails to identify them, it will not be possible to trade profitably.
Swing high and swing low
Swing high is the movement of value upwards before it falls back down. To find the key swing high in the trading instrument you must rely on the higher time frame. Once the price hits a major resistance, it forms the swing high point. These points are noted by the retail traders since they can take the short trade with the bearish price action signals. But never trade the swing points in the lower time frame since it will be very hard to deal with the obstacles.
On the other hand, swing low means the downward movement of the price before going up. The value of commodities is often considered as swing low for going long. Going long in trading means of buying stocks at a cheaper rate. When you buy stock at the cheaper rate, it means you are buying the asset at the support level.
So, learn to find the important support level to improve your trade execution process. It will be hard at the initial stage but you can take help from the experts. But make sure you stick to the demo account in the learning stage so that you don’t have to lose any real money.
These indicators help traders the retail UK traders to look for potential trades. Now when the value follows a series of swing high where the movement always remains higher high and higher low, we can say that the value is going uptrend. When the value goes uptrend, it means there is an increasing demand for the product and selling at this trend would be a good way to close a trade.
On the other hand, when the value goes lower low and lower high and a series of the swing low exists, the trend is then called a downtrend. Buying stocks at downtrend is an ideal trading strategy. But you must find the proper support to take the trades. Access to this website and open a demo account to learn bout support and resistance level trading. This will help you understand the swing high and swing low in a much better way.
Now, swing high and swing low are very important when it comes to identifying the trend of the market. Swing points can be used on any chart at any time from smallest to the highest. That is why it is very useful to learn about these swing points while speculating a market and initiating reversal trades. Many professional traders’ uses the swing trading method since it allows them earn decent amount of money. But to trade the market based on swing trading strategy you must be very precise with your actions. Failing to analyses the important market details can create massive confusion and create massive problem. Always learn to deal with the important points first and this will definitely help you to take better decision at trading.
If you get these points wrong, there is a big possibility of entering wrong trades and chances are wide that you may lose a big amount of money. Lack of knowledge about the swing points also indicates that you may buy at a higher price and sell at a lower price.
You may buy some stocks at a higher price thinking that the trend will go higher. However, instead of going upwards, the price goes below the support instead of getting hit and going upwards. And, you have to sell them at this lower price. Thus, while other traders are buying a cheaper rate, you are selling your stocks at this cheap rate. Since your cost price was bigger than your selling price, you will face a loss in this trade. Now, this loss is the result of not knowing about the swing points.
Trading at higher high and higher low-lower high and lower lows
Let’s say the opening price of a commodity is $10, after some time the price swung high at $15 but just after that fell at $12, then the price again went up at $18 and fell at $16. In the end, the price closed at $20. We can see that even though the price rose and fell several times, all the later prices were higher than the opening price. There were three swing highs so we will consider it as an uptrend. And, trading in this area is termed as trading at a higher high and higher low.
Trading at lower high and lower low is the same but in the opposite direction where the value is going downtrend. When you intend to take the trends in a bearish trend, try to find the major resistance level. Most of the major resistance levels are found by analysing the critical highs in the market. These points are also known as the swing high point. You can even draw the bearish retracement levels by using the swing high and low.
These swing points are extremely effective in case of range trading and reversal trading also. So, if you are thinking of adopting these methods then using swing points is a must for you. But make sure you analyses these points in the higher time frame so that you can get better results from the market. Never push yourself too hard to find these points as it will make things very hard at the initial stage.