Swing Trading

Swing Trading Strategies that
Work
Jesse Livermore, one of the greatest traders who ever lived once said that the big
money is made in the big swings of the market. In this regard, Livermore
successfully applied swing trading strategies that work and which helped him achieve
amazing financial results. The simple swing trading strategy is a market strategy where
the trades are held more than a single day, usually between 3 days and 3 weeks.
This time around, we’re going to outline a simple swing trading strategy that is similar to
what Jesse Livermore used to trade. Let’s also remember that this simple swing trading
strategy that Livermore used helped forecast the biggest stock market crash in history,
the Wall Street crash of 1929, also known as the Black Tuesday.
By the way, after the 1929 stock market crash Livermore reportedly made $100 million,
which adjusted for inflation is estimated to be about $1.39 billion today.
Quite a lot of money, wouldn’t you say

so? Now…
Before diving into some of the key rules that make up a swing trading strategy that
work, let’s first examine what are the advantages of using a simple swing trading
strategy.
· What are the Advantages of a Simple Swing Trading
Strategy
The main advantage of a simple swing trading strategy is that it offers great risk to
reward trading opportunities. In other words, you’re going to risk a smaller amount
of your account balance for a potentially much bigger profit compared to your
risk.
The second benefit of using swing trading strategies that work is that it will eliminate a
lot of the intraday noise. You’re now going to be trading like the smart money do, which
is in the big swing waves.
The last benefit of using a simple swing trading strategy is that you’ll not be glued to
the screen for the whole day like is the case with any day-trading strategy. A swing
trading strategy will work in all markets starting from stocks, commodities, currencies
and much more.
Before we get started, let’s look at what indicator you need for the job for the
Simple Swing Trading Strategy:
The First and ONLY indicator you need is the:
Bollinger Bands Indicator: Is a technical indicator developed by John Bollinger

designed not only to spot overbought and oversold territory in the markets but it also
gauges the market volatility.
This swing trading indicator is composed of 3 moving averages:

The central moving average, which is a simple moving average.
And then on both sides of these simple moving averages are plotted two other
moving averages at a distance of 2 standard deviations away from the central moving
average.
The figure above should give you a good representation of how the Bollinger Bands look
like. Most trading platforms come with this indicator in their default list of indicators.
The preferred setting for the swing trading indicator Bollinger Bands indicator are the
default settings because it makes our signals more meaningful. We reached this
conclusion after testing the strategy based on several inputs.
Now, let’s move forward to the most important part of this article, the trading rules of the
swing trading strategy that work.
Before we go any further, we always recommend writing down the trading rules on a
piece of paper. This exercise will step up your learning curve and you’ll become a
swing trader expert in no time.
Swing Trading Strategy that Work
(Trading Rules – Sell Trade)
Our simple swing trading strategy is really just comprised of two elements. The first
element of any swing strategy that works is an entry filter. For our entry filter, we’re
going to use one of our favorite swing trading indicators aka the Bollinger Bands. The
second element is a price action based method.
Step #1: Wait for the price to touch the Upper Bollinger Band
The first element we want to see for our simple trading strategy is that we need to see
price moving into overbought territory. Any swing trading strategy that work should
have this element incorporated.
Note* The preferred time frame for this simple swing trading strategy is the 4h time
frame, but the strategy can be used on the daily and weekly time frame as well.
Step #2: Wait for the price to Break below the Middle Bollinger Bands
After we touched the upper Bollinger Band, we want to see confirmation that we indeed
are in overbought territory and the market is about to reverse. The logical filter, in this
case, is to look after a break below the middle Bollinger Band. This break below
middle Bollinger Bands is a clear signal in the shift in market sentiment.
Step #3: The Breakout Candle needs to big a Big Bold Candle that closes near the
Low Range of the Candlestick → Sell at the Close of the Breakout
Candle
So far our favorite swing trading indicator has correctly predicted this sell-off, but we’re
going to use a very simple candlestick based method for our entry trigger. In this
regard, we want to see a big bold bearish candle that breaks below the middle
Bollinger Band.
The second element of this candlestick based method is that we need the breakout
candle to close near the low range of the candlestick. This is indicative of strong sellers,
which really want to drive this currency pair much lower.
Every swing strategy that work needs to have quite simple entry filters.
Now, we still need to define where to place our protective stop loss and where to take
profits, which brings us to the next step of our simple swing trading strategy.
Step #4: Place your Protective Stop Loss above the Breakout Candle
The breakout candle has a lot of significance because we’ve used it in our candlestick
based entry method. We assumed that this candle shows the presence of real sellers in
the market. If the high of this candle were to be broken, it’s clear enough that this is
simply a fake breakout as there are no real sellers.
It’s nothing complicated about it, right?

The next part of our simple swing trading strategy is the exit strategy which is based on
our favorite swing trading indicator.
Step #5: Take Profit once we break and close back above the middle Bollinger
Bands
In this particular case we’re looking at a short trading example. So, if the price breaks
back above the middle Bollinger Banks it’s time to get worried and take our profits as it
can signal a reversal.
The reason why we get profit here is quite here to understand as we want to book the
profits at the early sign the market is ready to roll over.
Note** The above was an example of a SELL trade… Use the same rules – but in
reverse – for a BUY trade. In the figure below, you can see an actual BUY trade
example, using our simple swing trading strategy.
You can notice that this trade is still running as we have yet to break and close below
the middle Bollinger Bands. This just proves that the higher the time frame the more
powerful our simple swing trading strategy is.
Summary:
Some complex strategies can be too overwhelming and confusing, so using a simple
swing trading strategy; it can be all it takes to succeed in this business. Albert Einstein
the greatest scientist of all time once said that "everything should be made as simple as
possible, but not simpler."
A swing trading strategy that work should be comprised of a swing trading indicator
that can help us analyze the trend structure, and secondly a price entry method that
looks at the price action which is the ultimate trading indicator.
To your success,
Aalon M Sheikh
As a Bonus for you we always like to include

examples of our strategy to help you perfect this
trading system.
Example 1: Gold 4 Hour Buy Trade Example

Example 2: GBP/USD 4 Hour Sell Trade Example
Example 3: AUD/USD Daily Sell Trade Example

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Swing Trading Strategies that

Quite a lot of money, wouldn’t you say

The First and ONLY indicator you need is the:

Bollinger Bands Indicator: Is a technical indicator developed by John Bollinger

This swing trading indicator is composed of 3 moving averages:

It’s nothing complicated about it, right?

As a Bonus for you we always like to include

Example 1: Gold 4 Hour Buy Trade Example

Example 3: AUD/USD Daily Sell Trade Example

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