The Best Indicators for Swing Trading: Top Technical Tools for Stock Market Analysis

Market swings can be a nightmare. At the same time, they can also represent opportunities. To make it profitable, you must know how to take advantage of the fluctuations. Among others, such is possible by using swing trading indicators.

Choosing the right indicator is vital since it can make or break your trading game. Meanwhile, experts recommend using one to four indicators to identify a trade signal. Using too many can be risky.

In this quick guide, I’ll discuss the best indicators for swing trading, so you’ll know what to use.

What Is Swing Trading?

First, let’s define what swing trading is. In a nutshell, it’s a trading style that aims to capture short to medium-term gains. It’s a speculative strategy wherein investors buy and sell assets depending on trends. For instance, they buy in an uptrend and sell in a downtrend.

One of the goals of swing trading is to identify stocks with momentum. In turn, you’ll know the best time to buy and sell. Further, it’s time-sensitive, so you must act fast if you want to profit from the trade.

Swing trading can take place over the next few days or weeks. This is unlike day trading, which requires closing your position when the market closes at the end of the day. You can hold your position as long as the trend continues.

The objective of swing trading is to capture the possible market swings or price movements. Your gains can be small. However, when you make such small gains continuously, it can grow into a huge profit.

How Swing Trading Works

The way swing trading works is straightforward. It captures short-term trends, expecting a price move within a few days or weeks. In contrast, trading strategies that aim to make larger gains will look at a longer timeframe.

Swing traders target pre-determined price points. They’ll put a stop-loss order after reaching a certain price. In turn, this is a way to minimize losses. More so, swing traders use technical analysis tools for evaluating price movements to make their trades more profitable.

After gaining profit from a swing trade, the trader will move on to the next. The premise is that while it only has small to medium profits, they’ll add up upon repetition.

Many swing traders will use trading charts ranging from several hours to days. This is what helps them determine when to enter and exit a market.

Strategies for Swing Trading

To better understand swing trading, you should look at some strategies you can execute. For example, you can buy when there’s an anticipated positive momentum. A change in price direction is a potential trigger for such an outcome.

In addition, another common strategy is to trade when the market is weak and sell when it’s strong.

Lastly, you can also trade using technical patterns. Take a look at multi-day chart patterns. Consequently, you can identify the ideal entry and exit positions.

What is a Swing Trading Indicator?

Simply put, a swing trading indicator is a technical analysis tool that helps spot new trading opportunities. Traders capitalize on minor trends to make small gains. It’s a cycle, so these small gains can eventually turn into big profits if you do things right.

By analyzing price data, swing trading indicators can provide clues on market trends. You’ll know whether an asset is over-bought or over-sold. Additionally, you’ll be familiar with other market conditions that will impact your trading decisions. Looking at the best chart patterns for swing trading helps make well-informed choices.

Top 5 Swing Trading Indicators

Are you searching for the best technical indicators for swing trading? Below is a rundown of the options you must know. They can help in analyzing trends to make sense of available data.

Moving Averages

One of the main goals of moving averages is to determine the average market price within a specific period. For instance, a 20-day moving average will show the moving average within the last 20 days. It’s a kind of lagging swing indicator.

The best moving average for swing trading depends on what you try to capture. A simple moving average looks at the average closing prices over a period. On the other hand, an exponential moving average puts more emphasis on the price that is closest to the current date.


It’s the number of times a specific asset has been traded within a specified timeframe. This swing trading indicator works as a tool that confirms price-action breakouts. The higher the volume, the greater the market direction strength of an asset is. In contrast, a low volume indicates weakness.

If you’re a beginner, this is one of the first swing trading indicators to learn. It’s the simplest, so you will not have difficulty understanding what it means.

Ease of Movement

This trading indicator explores the rate of change in an asset’s price and volume. Most traders will use them in daily charts. However, others can also use it in longer-term evaluations.

The market price progresses with relative ease when the value is above zero. The further it rises, the easier the price advances. However, when it gets below zero, the market is easily falling.

Relative Strength Index

One of the most popular momentum indicators, it shows whether the prices are at a level of being overbought or oversold.

In most cases, being above the 70 level show that it’s overbought. It signals the beginning of a short trade. On the other hand, those below the 30 levels show it’s oversold. Many traders often see this as a sign to go long.

Stochastic Oscillator

The last on our list of the best indicators for swing trading is one you can use for evaluating momentum. More so, it assesses if the changes in the momentum can affect the price.

It’s an oscillator with two lines moving from 0 to 100. One line presents the current stochastic value, while the other reflects the three-day moving average. Looking at these lines can help determine overbought and oversold levels.


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