According to Investopedia.com and other online sources, swing trading is a trading style that attempts to capture short to medium-term gains in a stock (or other asset class). The typical holding period of a swing trade is a few days to several weeks. Swing traders often use technical analysis to look for trading opportunities. To learn more about swing trading please check out this link: Swing Trading Definition (investopedia.com)
How can swing trading be improved with Seasonality? First, what is seasonality? Seasonality is a characteristic of price data which exhibits the consistent and predictable movement that recurs every calendar year. These short-term price movements trade in a certain direction or with similar magnitude during the same time period each year.
Swing trading and Seasonality are two peas in the same pod. Swing traders are looking for short to medium term gains and seasonality identifies periods where consistent gains have recurred year after year.
Swing Trading Strategies with Seasonals
Swing trades typically last a few days or even few weeks. This is the sweet spot for traders looking to turn over their capital quickly while avoiding the stress and required screentime of day trading. However, timing the market is a historically tough task as most performance data will show. Swing traders will look to chart patterns, technical indicators and seasonality to time their trades. A confluence or agreement of one or more factors can often help traders avoid poor trades while capturing more successful trades.
Seasonal trading gives precise entry and exit dates where historically the stock or any asset has performed well. This can greatly reduce research time, avoid headwinds and put the wind at your swing trade’s back. The application (Pricing – Seasonal Trading) can allow the swing trader to research any stock or asset and find the ideal entry and exit period based on years of historical data. Additionally, the SeasonalTrading.com newsletter sends the best five daily and five intraday trades for the coming trading day Sign up now to test it out.
Best Indicators for Swing Trading with Seasonals
Many traders focus on technical indicators but there is never a spoken consensus on what the best indicators are. In bear markets, many traders look to the simple moving averages to guide their longer-term investments. However, for short-term swing trading moving averages tend to be too slow, lagging the bulk of the market’s move. Using faster moving averages is often helpful but not enough to crown moving averages the best indicator. Relative Strength, Moving Average Crossover and Divergence, Stochastics, VWAP, Volume profile and chart patterns all deserve equal mention in determining what a swing trader should focus on. However, all swing traders should add seasonality to their repertoire as the historical data can help quantify market moves to assist more traditional technical analysis. Seasonality in conjunction with swing trading is often debated as the most helpful for timing the market.
Shares to buy today for swing trading with seasonals
No magical crystal ball exists, unfortunately. We do believe smart traders and watchlists work for some traders but it requires gut feel and deep market knowledge that ultimately, so few actually possess. A more robust approach would be to use statistics and data to find historical patterns that have shown profits in the past. Seasonality and seasonal trading provide insights into how stocks and ETFs behave during certain periods of the year. There is no guarantee that these patterns persist but at least the decision is rooted in data before entering the trade.
Can Seasonality help Swing Trading Beginners?
Adding historical data and seasonal patterns to swing trading strategy is a great starting point for new traders because it can help new traders avoid common pitfalls such as shorting energy stocks before the wintertime when energy consumption rises or betting against retail stocks before a surge in holiday sales or quarter one earnings reports.
Swing trading beginners are still building and perfecting their trading strategy. Adding seasonality and seasonal confluence to an existing strategy can help a trader identify key opportunities across different holding periods, stocks and other assets. If you are a new swing trader that looks to hold positions for a few days to a few weeks, then check out our free trial where you can search any stock or view the best available entries and exits each day in our newsletter. Combine our data and number crunching with your own swing trading analysis to level up.
Can Seasonality help with Swing Trading Stocks?
Seasonality can be applied to any asset class and any timeframe. Our tool was built for swing traders focusing on the stock market and we recently expanded our coverage to all other asset classes. Log into our application or give our newsletter a free try as we dissect decades of stock data and condense it into a stock’s average daily movement throughout the year. We know which days, weeks and months each stock tends to rise and fall based on the historical data. Nothing in trading and investing is a guarantee, but having the historical data and seasonal trends on your side is better than swimming upstream. We identify the optimal entry, exit and return historical metrics such as average return, winning percentage and more. If you think this data and insights would help, then seasonality can certainly help with swing trading stocks or any other asset.
