Chapter 3
What Is Trend Trading Or Swing Trading
Different traders have different explanations for this subject, few confuse it with position trades few do it thinking they are scalping. For me, it’s a combination of different time frame analyses and trying to catch a full swing. This is what I term swing trading. Time frame combination analysis I will share and explain in the coming chapters. For now, I am just sticking to swing trading gold in the direction of the trend at zones of highest reaction.
There might be different ways to invest in gold but I prefer a simple swing trading strategy.
Trend Is bearish or bullish by nature .there is no other way the price can trend, either it will trend up or it will trend down.
Now how are we going to know what price is doing, answer lies in the market structure research
If it is bullish we will be taking and trading bullish setups and in bearish trends we will be taking/ selling bearish swings.
A bullish swing
is considered to be a price movement from a swing point higher low to a swing point higher high. Refer Below picture for more visual clarity.
A bearish Swing
is considered to be a price movement from the swing point lower high to the swing point lower low. Refer visual illustration for a better understanding:
Now why it’s important to understand swings because if we have a good understanding of it here it will be as easier for us to catch full swing and sleep at night while the trend will do the rest of the work.
Two Types of swings
Trend swing
If the price is going up and we see a bullish swing then that bullish swing is a trending bullish swing.
In an uptrend market structure when a swing is formed from a higher low to a higher high it is called a Trending Bullish Swing.
In a downtrend market structure when a swing is formed from lower high to lower low then it is called a Trending bearish Swing
Counter Trend swings
A bullish swing in a downtrend market structure is called a counter-trend bullish swing.
Stop here and spend time on charts. think what message it caries
- Price is going down
- Banks and other big institutions because their overall price in the long term is going down.
- But small institutions which thought that it was very much down bought in between the major movement
- Ask yourself with whom you want to be big state or federal banks or small hedge funds or small institutions.
- A bearish swing in an up-trending market structure is called counter trend bearish swing same principle applies here, Big banks and small Retailers
So what’s the point to learn and understand trend and countertrend price movements, and trend or counter-trend moves. If you learn it then you will not be feeling the necessity of learning any of the other chart patterns.
Any other chart pattern is nothing more than price movements and market structure
I am not going to explain every chart pattern but will explain one to make you realize the importance of trends, swings, and market structure
For example chart patterns of head and shoulders
There is a chart pattern on the chart I am explaining, which is very famous for head and shoulders but we don’t require it if we know swings, market structure, and trend analysis
In the following chapters, I will try to explain in depth, the market structure analysis using key levels and how to never go against the main trends. I will also cover how to use multiple timeframes analysis, use Moving averages to support trend analysis, and also to time the entries using market structure, key levels, Fibonacci, candlesticks, and moving averages.
For more confluence trading and I will make a Fibonacci series of chapters covering all that can help a trader to find profitable trade setups.
Please join my Facebook group for better connectivity. I am not a guru I am just sharing my way, maybe it will help someone struggling to understand the market and incurring heavy losses. These chapters can help new traders and experienced traders also to bring back attention to the basics of trading.
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