Top 3 Indicators for Swing Trading

When it comes to the world of trading, whether we are talking about Forex, stocks, commodities, or cryptocurrencies, what you need to know how to use are indicators, especially for something like swing trading.

Indicators in trading are extremely valuable tools that provide you with a plethora of information, with the end goal of course being to help you make money by allowing you to enter and exit trades at the best possible times. Now, today we are here to talk about one very specific type of trading, swing trading, as opposed to other types, such as day trading.

In case you don’t know the difference between day trading and swing trading, no worries, because we will explain this in great detail. To be more specific, the main thing that we are here to talk about today is what the best indicators for swing trading are, and yes, there are quite a few of them.

Today, we want to figure out exactly what swing trading is, what indicators are and how they help you trade, what to look for in a good indicator, and finally, what the three very best swing trading indicators are at this time.

Swing Trading – What is it?

Alright, so the type of trading that you might be familiar with is day trading. Now, day trading is a type of trading that is also known as intraday trading, and the defining characteristic here is that trades are only open for a few hours, usually always less than a full day.

However, today we are here to talk about swing trading, which is a bit different. Swing trading sees trades that are open for much longer periods of time. These trades are generally open for anywhere for a few days to a few weeks, and even a few months, and this of course means that there is huge profit potential.

With that being said, the indicators that you would use for swing trading, at least the best ones, are not the same as for day trading. The fact that swing trading allows for huge profits is what attracts so many people, but that said, there is a bit of weekend and overnight risk, which makes using the right swing trading indicators just that much more important.

What are Trading Indicators?

Before we can start talking about the best swing trading indicators, we should probably provide you with a basic definition of what indicators are. In the world of trading and investing, and indicator is defined as statistics that are used to measure current market conditions as well as to forecast future economic trends and financial conditions.

These indicators usually always refer to a set of specific technical chart patterns that are plotted in a visual manner, and are derived from the volume, price, or the open interest of a given security. The other thing that you need to know here is that there are four main types of indicators out there, each of which provide you with a different type of information.

The four indicators out there are those that provide you with info about the volume, volatility, trend, and momentum of an asset or security. These are all equally important pieces of info that a swing trader needs to know. However, when it comes to swing trading indicators, there are some important criteria to look out for, so let’s move on.

Choosing the Best Swing Trading Indicator

Alright, so before you go out and start using random indicators for swing trading, there are a few important things to look out for, some criteria that your indicators should meet.

First and foremost, what you need is an indicator that is easy to understand, particularly if you are a newbie. The fact of the matter is that some indicators are much more complex than others, which is fine if you know what you are doing, but as a newbie, you need something that is easy to understand.

Next, when it comes to the best swing trading indicators, perhaps the most important criteria to look out for is that they provide you with as much information as possible. The simple reality here is that some traders will use many indicators at once, sometimes 5 or more.

Well, as a newbie, using so many indicators at once is a surefire way to confuse yourself, so the indicators you use should provide as much info as possible, so then you only need to use one or two at most. A good swing trading indicator should tell you at least three things, which include determining entries, determining how to take profits, and determining your stop loss.

Although not 100% necessary, you should also look for swing trading indicators that are free to use. There are plenty of free indicators out there, and some of the best ones won’t even cost you a single penny.

Top 3 Swing Trading Indicators

To finish things off, we want to provide you with a quick lowdown of the top 3 swing trading indicators out there.

OHLC

The Open High Low Close indicator is one of the best ones to use for swing trading, and it’s because it helps traders to easily visualize highs and lows of daily candles no matter the time frame in question. If you see the price forming a bearish candle from the previous day’s highs, you know to go short, and if the price forms a bullish candle from the previous says lows, you can go long. It’s also a good indicator for providing you with a heads up about trend reversals.

Zig Zag

The zig zag indicator helps you determine the market structure and plots it out on the chart for you. Whenever a price reverses by a percentage that is greater than a pre-chosen variable, the indicator plots points on a chart. If you need to identify price trends while also eliminating random price fluctuations, then this is a great indicator to use, but you do need to use together with price action.

Donchian Channel

Another trading indicator that you definitely want to familiarize yourself is the Donchian channel, which helps you visualize both low and highs on a chart, and it’s all about being able to identify the lowest lows and the highest highs based on a certain period of time. If you need to identify potential buy and sell trades, then this is a fantastic indicator to use. For instance, the upper channel is a reference to sell and the lower channel is a reference to buy. This is like a support and resistance indicator on steroids.

Swing Trading Indicators for Newbies

Now that you know what the best swing trading indicators are, you can learn all about them, master them, and start swing trading for great profits.

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