One of the easiest approaches to trading that is suitable for the average busy person all day is swing trading. It offers plenty of opportunities to make consistent profits from the market and does not require you to spend all your time in front of a computer. Swing trading is the best strategy, which is based on capturing a single major movement in the market. That is, exiting the trade before the price goes into a correction again.

Swing Trading in Kenya

One of the first steps of a trader on his way to success is choosing the style in which he plans to work. More often than not you have to choose between two variants. Swing trading or action trading: which style is better?

Swing trading strategies

Swing trading allows you to profit from price volatility. Rather than getting hung up on a particular time frame, swing traders identify the direction of price movement, open a position and hold it for the duration of the rise/fall. Unlike swing day trading strategies allows trades to be held open for several days or even weeks. 

With swing trading, you will enter into a position with a price movement of between 1.5 per cent and 5.0 per cent. This is why we work with instruments with higher volatility. 

While choosing a swing trading strategy, the trader should be guided by the support and resistance levels, along with the financial analysis. Without taking into account the fundamentals, there is no way to count on big profits.

Choose your strategy
Choose your strategy

Intraday trading (Day Trading)

The main feature of this style is opening and closing all trades during the trading day. It is believed that not a single transaction is carried over to the next day. In fact, this is a false belief. A trader can open an order and leave the most profitable transaction overnight. The difference is that the percentage of such operations will be miserable in relation to the intraday trading.

Day trading requires maximum attention and focus on the chart during the whole working session or at least during the main time intervals. There are many strategies in day trading, but the overall profit is formed from profits from small trades, as in scalping. The advantage of this approach is the low risk of losses. On the other hand, you should not expect large profit from every trade.

By choosing day trading, the trader has to sit in front of the monitor screen and control the price movement and open/close transactions. This style of trading requires rigidity and maximum activity on small timeframes limited to one, five or fifteen minutes. 

A swing trading strategy attempts to capture short to medium-term profits from a stock (or any financial instrument) over a period of days to weeks if the trade remains profitable. Swing day trading strategies use technical analysis to identify patterns, trend direction and potential short-term changes in the trend.

Features of swing trading strategies:

  • Volatility. High volume generates high volatility. Volatile stocks are a good choice for a swing stock trading strategy, because the trader will profit from large short-term movements. 
  • Volume. When swing trading, you need to consider volume because large movements over short periods of time are not possible without significant stock volume. In most swing trades, look for stocks with more volume than usual - this is the most important thing.
  • Catalyst. Most swing trades start by finding a catalyst that can trigger a powerful stock movement. 

A swing trading strategy in Kenya captures small movements within a larger overall trend. Swing traders aim for many small gains which add up to significant profits.

The swing trading strategy focuses on taking smaller profits in short-term trends and reducing losses more quickly. The profits may be smaller, but they are compounded and give excellent returns when there is constant movement.

Swing trading strategies for equities in Kenya

Channel trading

This strategy helps to identify a stock which is showing a strong trend and is trading within a channel. When using channels to swing trade a stock, it is important to trade within the trend.

Support and resistance triggers

Based on support and resistance lines, you can build a successful swing trading strategies stocks. A support level indicates a price level or area on the chart below the current market price where a buy is strong enough to overcome sellers' pressure. A swing stock trader will seek to open a buy trade on a bounce from the support line by placing a stop loss below the support line.

Resistance is a price level where downward pressure from sellers can weaken pressure from buyers, leading to a price reversal against the uptrend. In this situation, a swing trader might open a sell position on a rebound from the resistance by placing a stop loss slightly above the resistance line.

MACD crossing

This indicator is used to determine the direction of a trend and its reversals. The MACD is made up of two moving averages - the MACD line and the signal line - and buy and sell signals are generated when the two lines cross. As soon as the MACD line crosses the signal line, a bullish trend appears, and you should consider opening a buy trade. If the MACD line crosses the signal line, a bearish trend is likely, suggesting you should sell the stock.

Fibonacci Correction

The Fibonacci retracement model allows traders to identify support and resistance levels and possible reversal levels on stock charts. Stocks often tend to pass a certain percentage within a trend before reversing again reversal, and drawing horizontal lines with classic Fibonacci ratios of 23.6%, 38.2% and 61.8% on a stock chart helps show potential reversal levels. 

10- and 20-day SMA

One of the most popular swing trading strategies stocks involves the use of simple moving averages (SMAs). SMAs smooth price data by calculating a constantly updated average price, which can be taken over a specific time period or duration.

In a swing trading system with a 10-day and 20-day SMA, you apply two SMAs of that length to a stock chart. When the shorter SMA (10) crosses the longer SMA (20), a buy signal is generated, as this indicates an uptrend. When the shorter SMA crosses below the longer SMA, a sell signal is generated, as this type of SMA crossing indicates a downtrend.  

Anyone can become a swing trader in Kenya. Start by understanding what swing trading strategies mean, learn all the basics and then start researching if swing trading is right for you. Try it and you are sure to succeed!

For more advanced swing trading strategies, swing trading can be combined with other technical analysis indicators as well as price action to achieve better results. These tools can help traders understand when to enter or exit a position, where to place stop losses and when to exit a bad swing trade.

Studying swing trading strategies involves focusing on key aspects:

  • The point of entry into the trade or where the trader opens the position. There are two approaches that can be used. One is to open a position after price enters a meaningful zone (near levels or a moving average). Or one can wait for a confirmation signal first. Confirmation signals may be: a false-breakout or a pin bar.
  • Exit points. There are two rules for determining the market exit points. The first rule is to determine the profit taking target and stop loss level. A stop-loss is a limit order which protects you from further losses when the price moves against your position. Always set your stop loss first. The second rule is to identify both stop-loss and take-profit levels before you risk any capital. Take Profit is a pending order (order) to take profits. Once the price reaches a certain value, this order is triggered and you close your position and take profit. Only at this point you have a neutral view of the market.

The best way to identify exit points is to use support and resistance levels. 

Wing trading strategies are popular primarily because they offer the opportunity to gain maximum returns from the financial markets with less effort and time. At the same time, you can work at your main job and not quit your job.

Register, trade and make a profit!
Register, trade and make a profit!

How to trade a swing stock trading strategy in Kenya?

The most popular and affordable way for every trader to start trading with swing trading strategy in Kenya is to open a trading account with a broker on the online platform. You need to fill out a user account profile before uploading verification documents such as name, email address and confirm the registration process. You will then always have access to the trading platform and the trading accounts opened on it.

Registering on the investing platform
Registering on the investing platform

Once you have registered, you can proceed to make a deposit into your approved trading account using one of the payment methods provided. You may do it by transferring money via bank card, bank transfer or via e-wallet. Depending on the chosen method of funding, the money will be received from 5 minutes to 5 days.

Choose an account for trading
Choose an account for trading

When opening a trade, a trader can turn on the leverage, which means that his trade will grow in size. This can mean big profits or much bigger losses. It is usually not recommended for beginners unless they are absolutely sure that they know what they are doing. 

Once you register you will have access to a trial version - a demo account. This is an open-ended account, which is a definite plus for beginners. To switch from a demo account to a live account, you do not need to register again. As far as basic parameters and possibilities are concerned, a demo account does not differ from a regular one. Trading on such an account is done with virtual money. 

Demo Account gives you a chance to get priceless experience with swing trading strategies stocks in Kenya, learn how to deal with different situations, explore the trading platform features, etc. Just get started, the most important thing is the first step!

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