![]() In the world of trading, and particularly swing trading, this is a concept that we use a lot – and most importantly – that works! The tendency of a market to overreact and then correct that move, can be seen in many markets, but is especially apparent in stocks and equity indexes. Or in other words, that things tend to even out over time. In short, it explains how extreme events are very likely to be followed by more normal events. Mean Reversion, or regression to the mean, is a concept that was first observed by Francis Galton. Having said all this, let’s explore swing trading strategies by first looking at the most common types of swing trading strategies! Mean Reversion Swing Strategies Instead, use it as inspiration We certainly have been able to build strategies from ideas that in themselves were worthless, but that managed to spark an idea that led us right eventually. This is why we recommend you to never take a swing strategy you read online for a working strategy. Well, there certainly is, but for a beginner with no point of reference, it certainly is not easy. In fact, a profitable system could be turned into a losing system, just by changing the exit condition!ĭon’t miss: Is Swing Trading Profitable? Is there Nothing Good to Find Online? When many traders focus on entries, they often forget to even think about the exit. The second reason simply is that the trading strategy is not complete. the more well-known a market strategy or tendency gets, the less effective it becomes since everybody is chasing the very same edge! Not a Complete System That is not to say that they are worthless! We use them a lot in our trading, but most times in unconventional and innovative ways, that very few people trade. Candlesticks, chart patterns, and popular trading strategies with a few exceptions, none of them work when used in the traditional way. The first reason is very common and could be said about the most popular concepts in trading. The strategy only consists of buying conditions.The swing trading strategy simply holds no merit at all and is merely somebody’s view of what the market SHOULD do.The sad truth is that there are very few strategies like this that work, and there are mainly two reasons for that: If you google “swing trading strategies”, apart from this article, you will probably find a few others that present clear rules that they claim work in the markets. ![]() These entry conditions are not even optimizable, since they use a greater/smaller than logic! Swing Trading Strategy Why Most Swing Trading Strategies Found Online are Worthless It consists of not more than 2 conditions with simple logic that everybody can understand, and exits the trade with a simple time exit. ![]() Some of our best swing trading strategies are made up of as few as two (!) conditions.įor example, have a look at this swing trading strategy. With more conditions, you run the risk of curve fitting, which in short means fitting your rules to random market noise rather than true market behavior. While many people believe that a good swing trading strategy is one that incorporates advanced logic and a myriad of rules and conditions, they could not be more wrong! The best trading strategies are those that use few and preferably simple conditions. ![]() What Makes a Good Swing Trading Strategy? The other strategies can be found below under the title ” swing trading strategies that work”. Just keep in mind that these are just examples and might not work. We will also provide some strategies that we think demonstrate the logic in a nice way. However, before we show you these strategies, we will go cover the two big categories of swing trading strategies. However, this does not mean that every trader is doomed to fail! By using a trading strategy that is properly tested and has been vetted through tough robustness testing, every trader has a realistic chance of becoming profitable in the market! ![]()
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