Trend Following Swing Strategy
IntermediateDaily and 4-hour chartsSwing Trading
Strategy Overview
Riding established trends by entering on pullbacks to key moving averages.
How It Works
Trend following swing trading involves identifying strong trending stocks and entering positions during temporary pullbacks to key support levels like moving averages or trendlines. This strategy capitalizes on the tendency of trends to continue rather than reverse. Traders hold positions for days to weeks, allowing them to capture larger moves while avoiding the noise of intraday fluctuations. The key is patience—waiting for high-probability setups where the risk/reward is favorable.
Setup Rules
- 1Stock must be in clear uptrend (higher highs/lows)
- 2Price above 50 and 200-day moving averages
- 320-day MA above 50-day MA (for uptrend)
- 4Relative strength vs market
- 5Volume confirming trend direction
Entry Rules
- Enter on pullback to 20 or 50-day MA
- Look for bullish reversal candle at support
- Confirm with oversold RSI bouncing
- Volume should decrease on pullback
Exit Rules
- Initial target at previous swing high
- Trail stop below 20-day MA
- Exit if trend structure breaks
- Take profits at major resistance
Risk Management
- Stop loss below recent swing low
- Risk 1-2% of account per trade
- Position size based on volatility
- Maximum 5-6 positions at once
Advantages & Disadvantages
Advantages
- • Captures larger moves
- • Less screen time required
- • Clear trend structure
- • Good risk/reward ratios
Disadvantages
- • Requires patience for setups
- • Overnight gap risk
- • Drawdowns during corrections
- • Can miss quick reversals
Best Market Conditions
Strong trending markets with clear direction