| In swing trading, it is very important for you to use | | | | and daily charts. Anything longer is only appropriate |
| the trending indicators for a trending stock or | | | | for position traders or buy and hold investors. Now, if |
| security and a ranging indictor to a ranging stock or | | | | you are satisfied with your eyeballing the charts, you |
| security. Before swing trading a stock or a security, | | | | can use an indicator that can tell you about the |
| you need to determine whether the stock or the | | | | strength of the trend. |
| security is trending or ranging. You need to do this | | | | The most popular indicator that shows whether the |
| right in order to make your swing trading a profitable | | | | security is trending or ranging is the Average |
| success. | | | | Directional Index (ADX). ADX actually measures the |
| So the first important question that you need to ask | | | | strength of the trend rather than it's direction. It |
| before swing trading is whether this market is | | | | oscillates between the value of 0 and 100. The |
| trending or not. The easiest way to determine a | | | | standard setting for ADX is 14 days period. |
| trend in the market is to take a look at the security | | | | If the ADX is below 20, the security is in a trading |
| chart. If you see a series of higher highs and lower | | | | range and if the ADX is above 30, the security is |
| lows in the chart, you know there is a trend. If not | | | | considered to be trending. Readings between 20 and |
| then it is ranging. In that case, you need to see clear | | | | 30 are mostly ambiguous. When the reading is |
| support and resistance areas meaning the security | | | | between 20 and 30, if the ADX is rising and above |
| prices clearly rises and falls between these two levels. | | | | 20, you can take it as trending. And if ADX is falling |
| When you eyeball the security chart, you are not | | | | and below 30 but above 20, you can take it as the |
| every sure. It is a subjective thing that depends on | | | | security is in a trading range. |
| the time frame that you are using on the charts. | | | | As long as you are not able to determine whether |
| Suppose you are eyeballing on the one hour chart. | | | | the security is trending or non trending (ranging), you |
| The security may appear to be trending. But when | | | | should avoid planning any sort of a swing trade or for |
| you try to eyeball it on a daily chart, the security | | | | that matter any trade at all. The onus is on your to |
| may appear to be ranging. | | | | determine whether the security is trending or non |
| As a swing trader, you should only rely on the hourly | | | | trending. The best way is to use the ADX indicator! |