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Download this Forex Swing Trading Powerful FOREX-4 PACK End of Day Trading Training Kit (100+ page PDF plus Videos) FREE just now. You won’t find this type of FREE training anywhere else. Master these Candlestick Patterns with this 82 page PDF Candlestick Guide. Get your FREE COPIES of the HVMM Ultimate Day Trading System plus the Universal Risk & Money Management Tool! In swing trading you need to know whether the security is trending so that you can apply the right indicator. It is very important for you to apply the trending indicators to the trending market and non trending indicators to the non trending market.

So the first important question that you need to ask before swing trading is whether this market is trending or not. The easiest way to determine a trend in the market is to take a look at the security chart. If you see a series of higher highs and lower lows in the chart, you know there is a trend. If not then it is ranging. In that case, you need to see clear support and resistance areas meaning the security prices clearly rises and falls between these two levels.

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Now eyeballing the security chart is a subjective thing. Timeframes can affect what you see. For example, you may find the security trending on the one hour chart but when you switch to the daily chart, it maybe ranging.

As a swing trader, you should only rely on the hourly and daily charts. Anything longer is only appropriate for position traders or buy and hold investors. Now, if you are satisfied with your eyeballing the charts, you can use an indicator that can tell you about the strength of the trend.

The most popular indicator that shows whether the security is trending or ranging is the Average Directional Index (ADX). ADX actually measures the strength of the trend rather than it’s direction. It oscillates between the value of 0 and 100. The standard setting for ADX is 14 days period.

If the ADX is below 20, the security is in a trading range and if the ADX is above 30, the security is considered to be trending. Readings between 20 and 30 are mostly ambiguous. When the reading is between 20 and 30, if the ADX is rising and above 20, you can take it as trending. And if ADX is falling and below 30 but above 20, you can take it as the security is in a trading range.

As long as you are not able to determine whether the security is trending or non trending (ranging), you should avoid planning any sort of a swing trade or for that matter any trade at all. The onus is on your to determine whether the security is trending or non trending. The best way is to use the ADX indicator!

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