A swing low is a trading strategy that uses a “swell” or bounce to support or increase the price. A rise in price is usually attributed to a market move. When a trading strategy can hold its price steady for a prolonged period of time, this is a swing low.
This is the only form of low in the market that provides meaningful trading returns.
In short, a swing low is very similar to a pick, which is the first trade in a futures trading strategy.
A swing low is also known as an extended high in a spot market. The difference is that a swing can be executed for more than a few days.
This is why I choose not to use swing lows for my hedging and trading, and for many others, as they are usually not very profitable.
In addition, as of December 2015, swing lows are not required in some places.
The reason for the change is simple: I am not using them as much as I once did.
How to Know When a Swing Low is Happening
What is an optimal time to buy and sell a swing low?
This is the time that I buy my swing low when volume is lowest. When this time is reached, I will make a profit and stop selling the trade.
I will stop short of what I consider a riskless swing low (such as a spike high or a new record high).
In this case you could always close this position after a rise and avoid losses.
So now that you understand, what is a swing low? What does a swing low look like in the daily and weekly charts?
The Swing Low
The swing low is what I use for my daily charting.
Here I use a 60 day moving average to show the current price.
I also add volume (percentage) to the top and bottom of the 60 day moving average.
This is called the MACD indicator, also know as the “margin of safety.”
So how do you know when a trade is good for a swing low?
There is a trade that is the best for low hanging fruit trades.
The trade will always have an above average gain and a trade that has a loss.
That trade always has a risk tolerance of 5%.
There are three levels that you will see on the daily chart:
The high high
The low low low
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