10 Best Swing Trading Strategies

10 Best Swing Trading Strategies 2024 – (Backtested, Setups, Video Analysis)

What is the best swing trading strategy? Is swing trading still profitable with positive returns? We have summarized 10 free swing trading strategies that might help you start your trading career. The internet is flooded with anecdotal evidence about how to swing trade and how to make money. Unfortunately, almost all articles consist of unproven and untested swing trades. Swing trading is difficult, but we believe you face much better odds the more you backtest and generate trading ideas. Backtesting works and gives you a good estimation of what you can expect.

Below we provide you with 10 free swing trading strategies that work. They are all backtested many years ago, some were published on this website as far back as 2012, and the swing trading strategies have proven to hold up well after they were published. These are some of the best swing trading strategies that we can come up with at this time.

10 Best Swing Trading Strategies

The advantages of swing trading can be summarized like this

  • Lower drawdowns by being invested only when you have an edge.
  • Lower drawdowns mean you can use a bit of leverage (if you want to use leverage).
  • Can turn around capital fast – little idle money. You are only invested when you have an edge.
  • Swing trading is scalable. You can make money quickly.

Thus, before you swing trade stocks, commodities or FOREX, we recommend figuring out if this is something for you.

What is swing trading?

Swing trading is a style that is longer than day trades but not more than a couple of months. Day trading buys and sells the same day, while position trading and buy and hold have time frames that last years and even decades.

We believe that different time frames in trading are an excellent tool for diversification – a vital tool to smooth drawdowns:

If you are interested in learning more about swing trading, we recommend reading this swing trading guide.

Why swing trade? The advantages of swing trading

Buying and holding stocks have returned about 10% annual CAGR over the last 100 years, and many see little value in trying to time and trade the markets by swing trading.

Our answer is: yes, for the majority, it makes sense to buy some mutual funds and forget about it (but save regularly). Time will compound your capital while you do nothing and continue your everyday life. But of course, this is a “get rich slowly” approach that requires decades. You might want to find out what is best for you: Is It Better To Trade or Invest In Stocks?

Warren Buffett made 99% of his wealth after he turned 50! This is how compounding works: you need time, a long runway, and lots of patience.

The main advantage of buying and holding is that it works as long as we as a society can become ever more efficient. Efficiency gains are transferred to owners of companies that produce goods and services, and thus owners are rewarded in the long run.

Because of this, we believe that a buy-and-hold portfolio consisting of mutual funds/ETF and stocks (or both) should always be the cornerstone of your savings and capital.

However, why not do both – swing trading and buy and hold – as we do? If you backtest and do swing trading systematically, we believe most rational investors can make excellent risk-adjusted returns.

Swing trading comes with risk

However, you can also waste time and money if you don’t make swing trading work. Swing trading is not easy, and please make sure you only risk money that you can manage to live without. We also recommend trading it mechanically or automatically via a trading platform (algo trading), for example, Amibroker.

Always start small and trade smaller than you’d like to avoid behavioral mistakes. Furthermore, the trading strategies below can only be considered ideas – they might even contain minor errors. Always do your own research and never trust anyone except yourself. Always verify the strategies yourself!

Victor Niederhoffer had a relevant comment in his book called The Education Of A Speculator:

Self-trust is the foundation of successful effort.

Which indicator is best for swing trading?

We have made a test where we compared what we believe are the best indicators for swing trading. The best indicator is one that is not so well known:

10 free swing trading strategies

All the swing trading strategies below are taken from our landing page for free trading strategies. These are articles we have published since 2012.

However, we remind you that our best trading edges/strategies are reserved for those who pay the subscription fee. Hence, half the strategies below are only for our paying members.

Swing trading strategy code

All strategies below are backtested in Amibroker. If you want the code for the strategies, you can order them by becoming a member (many are also in Tradestation code).

All strategies come in Plain English as well for any Python or other software programmers.

As a bonus, you get all the code for all the other free trading strategies we have published since 2012. However, the majority is only provided in Amibroker code. Alternatively, you can learn coding in our Amibroker course.

Relevant articles about swing trading:

If you are new to trading and don’t understand the terminology or indicators, these articles provide you with relevant information:

Swing trading strategy no. 1: Monday reversal in the S&P 500:

This strategy can be traded in the ETF with the ticker code SPY or the futures market: the e-mini or the recent micro contract.

This strategy was published in 2012 and in plain English works like this (trading rules):

Trading Rules

THIS SECTION IS FOR MEMBERS ONLY. _________________ BECOME A MEBER TO GET ACCESS TO TRADING RULES IN ALL ARTICLES CLICK HERE TO SEE ALL 350 ARTICLES WITH TRADING RULES

This is all there is to it, pretty simple.

100 000 invested in 1993 and compounded until today returns this equity curve:

10 trading strategies
10 trading strategies

  • No. of trades: 292
  • Average gain per trade: 0.81%
  • CAGR: 7.3% (buy and hold 10.3%)
  • Time spent in the market: 18%
  • Max drawdown: 17%
  • Profit factor: 2.1

Swing trading strategy no. 2: Overnight swing trading strategy in the S&P 500

The strategy can be traded in the ETF with the ticker code SPY or the futures market: the e-mini or the recent micro contract.

overnight-trading-s&p

The strategy is like this in plain English (trading rules):

THIS SECTION IS FOR MEMBERS ONLY. _________________ BECOME A MEBER TO GET ACCESS TO TRADING RULES IN ALL ARTICLES CLICK HERE TO SEE ALL 350 ARTICLES WITH TRADING RULES

This is the equity curve for SPY since inception until today:

10 swing trading strategies
10 swing trading strategies
  • No. of trades: 672
  • Average gain per trade: 0.14%
  • CAGR: 2.9% (buy and hold 10.4%)
  • Time spent in the market: 8%
  • Max drawdown: 8%
  • Profit factor: 1.6

Swing trading strategy no. 3: Buy When S&P 500 Makes New Intraday High

The strategy can be traded in the ETF with the ticker code SPY or the futures market: the e-mini or the recent micro contract.

The strategy works like this (trading rules):

THIS SECTION IS FOR MEMBERS ONLY. _________________ BECOME A MEBER TO GET ACCESS TO TRADING RULES IN ALL ARTICLES CLICK HERE TO SEE ALL 350 ARTICLES WITH TRADING RULES

This is the equity curve for SPY since inception until today:

  • No. of trades: 205
  • Average gain per trade: 0.46%
  • CAGR: 3.25% (buy and hold 10.4%)
  • Time spent in the market: 11%
  • Max drawdown: 21%
  • Profit factor: 2.27

Swing trading strategy no. 4: Monday/Tuesday trade in Nasdaq

This strategy can be traded for the ETF with the ticker code QQQ or the futures market: the NQ e-mini or the recent micro contract.

In plain English, the strategy can be described like this (trading rules):

THIS SECTION IS FOR MEMBERS ONLY. _________________ BECOME A MEBER TO GET ACCESS TO TRADING RULES IN ALL ARTICLES CLICK HERE TO SEE ALL 350 ARTICLES WITH TRADING RULES

100 000 invested in 1999 and compounded until today returns this equity curve:

10 trading strategies trading rules
10 trading strategies trading rules
  • No. of trades: 302
  • Average gain per trade: 1.2%
  • CAGR: 14.4% (buy and hold 9.8%)
  • Time spent in the market: 18%
  • Max drawdown: 28%
  • Profit factor: 3.1

Swing trading strategy no. 5: Rotation strategy in SPY and TLT

This strategy rotates between being invested in SPY and TLT and is always invested. The strategy was first published in 2017.

  1. Every month rank SPY and TLT from the month’s close to the previous month’s close.
  2. On the next day’s open, buy the ETF with the best performance of the last month. If you are already long the one with the best performance, keep holding.
  3. Rinse and repeat.

100 000 invested in 2002 and compounded until today returns this equity curve:

  • No. of trades/switches: 126
  • Average gain per trade: 1.8%
  • CAGR: 9.1%
  • Time spent in the market: 100%
  • Max drawdown: 41%
  • Profit factor: 1.8

Swing trading strategy no. 6: Rotation strategy in SPY, GLD ,and TLT

This strategy rotates between being invested in SPY, GLD, and TLT – always invested. The strategy was developed in 2017, and thus we have four years of out-of-sample testing.

These are the trading rules:

  1. Calculate the 3-month and 10-month simple moving average for each asset.
  2. At the end of the month, go long each asset where the 3-month simple moving average is higher than the 10-month average.
  3. If you get one signal, allocate 100% to that position. If you get two signals, allocate 50% each. If 3, allocate 33.3% to each.
  4. Rinse and repeat every month.

100 000 invested in 2004 and compounded until today returns this equity curve:

  • No. of trades/switches: 460
  • Average gain per trade: 0.8%
  • CAGR: 8%
  • Time spent in the market: 88%
  • Max drawdown: 19%
  • Profit factor: 1.5

Swing trading strategy no. 7: XLP mean reversion strategy

This strategy is meant for consumer staples: the ETF with the ticker code XLP.

The strategy is like this (this is close to Bollinger band strategy):

  1. Calculate an average of the H-L over the last 25 days.
  2. Calculate the (C-L)/(H-L) ratio every day (IBS).
  3. Calculate a band 2 times lower than the high over the last 25 days by using the average from point number 1.
  4. If XLP closes under the band in number 3, and point 2 (IBS) has a higher value than 0.4, then go long at the close.
  5. Exit when the close is higher than yesterday’s high.

100 000 invested in 2000 and compounded until today returns this equity curve:

  • No. of trades: 389
  • Average gain per trade: 0.41%
  • CAGR: 8% (buy and hold 8.8%)
  • Time spent in the market: 31%
  • Max drawdown: 17%
  • Profit factor: 1.75

Swing trading strategy no. 8: MACD-Histogram on the S&P 500

We read about the MACD-histogram for the first time in Alexander Elder’s Trading For A Living. The indicator is based on the MACD indicator, and you can read more in this article:

In plain English, the strategy works like this:

THIS SECTION IS FOR MEMBERS ONLY. _________________ BECOME A MEBER TO GET ACCESS TO TRADING RULES IN ALL ARTICLES CLICK HERE TO SEE ALL 350 ARTICLES WITH TRADING RULES

100 000 invested in 1993 and compounded until today returns this equity curve:

10 swing trading strategies settings
10 swing trading strategies settings
  • No. of trades: 154
  • Average gain per trade: 1.02%
  • CAGR: 5.1% (buy and hold 10.3%)
  • Time spent in the market: 5.8%
  • Max drawdown: 16%
  • Profit factor: 4.7

Swing trading strategy no. 9: The turn of the month strategy in the S&P 500 (and Nasdaq)

The stock market shows abnormal returns at the end of the month and the first days of the new month. The turn of the month strategy can be used as a stand-alone strategy, but we use it after adding one filter (in the Monthly Trading Edges).

In plain English, the strategy is as follows:

  • Buy at the close on the fifth last trading day of the month.
  • Exit at the close of the third trading day of the new month (after seven trading days).

This is all there is to it. It’s a simple strategy that is only invested about 33% of the time, but it holds up pretty well with buying and holding, which spends 2x more time in the market.

10 swing trading strategies best strategy
10 swing trading strategies best strategy
  • No. of trades: 376
  • Average gain per trade: 0.63%
  • CAGR: 7.3% (buy and hold 10.3%)
  • Time spent in the market: 33%
  • Max drawdown: 21%
  • Profit factor: 2

The equity chart for QQQ is not as good as the dot-com bubble, forcing it into a drawdown of 51%, but it is still substantially better than the index’s 83% drawdown. The CAGR since inception is still a respectable 7.2%:

Swing trading strategy no. 10: Trend-following by using the 200-day moving average and the 12 month moving average

My metric for everything I look at is the 200-day moving average of closing prices. I’ve seen too many things go to zero, stocks and commodities. The whole trick in investing is: “How do I keep from losing everything?” If you use the 200-day moving average rule, then you get out. You play defense, and you get out.

This is what Paul Tudor Jones once said about the 200-day moving average. He is somewhat correct: the 200-day moving average is an efficient tool to keep you out of problems.

However, it has its downsides. One of them is frequent whipsaw trades that can lead to underperformance. As long as the asset you are swing trading has no major drawdowns, you are unlikely to beat buy and hold. This is evident in the S&P 500 after the GFC in 2008/09 (the S&P 500 being fueled by quantitative easing).

We have covered the 200-day moving average before in these two articles (we used the 12-month moving average in the article about gold):

Let’s test this simple strategy in the S&P 500:

  • If the close crosses above the 200-day moving average, we buy at the close.
  • If the close crosses under the 200-day moving average, we sell at the close.

You can also buy at the next day’s open because it doesn’t change the strategy much.

The performance since 1960 is like this (this is the cash index and doesn’t include reinvested dividends):

The main advantage of the 200-day moving average is exactly what Paul Tudor Jones said: it keeps you out of big trouble and acts as a good defense. The most significant drawdown is only half of the buy and hold strategy: 28 vs. 55%.

  • No. of trades: 199
  • Average gain per trade: 2.5%
  • CAGR: 6.7% (buy and hold 7.2%)
  • Time spent in the market: 70%
  • Max drawdown: 28%
  • Profit factor: 2.8

Bonus swing trading strategy: 12-month moving average trading system in gold

What about gold? We are long gold when the close is higher than the 200-day moving average, and we are out (sell) when gold is below the 200-day moving average.

It turns out the simple moving average does a great job of keeping you out of problems:

swing trading strategies
The simple 200-day moving average trend following system beats buy and hold by a wide margin.

The reason why the strategy beats buying and holding gold is that it keeps you out of the worst drawdowns.


Are most swing traders successful?

Unfortunately, most swing traders are not successful. The reason is due to two factors:

  1. Short-term trading is a zero-sum game.
  2. Most traders don’t have a statistical trading edge in the first place.

5 swing trading strategies video

In the video below, we present 5 backtested swing strategies. A few of them are not included in this article. The video includes trading rules, equity curves, statistics, and metrics (we have plenty of videos on our YouTube Channel):

Swing trading strategy glossary

  1. Swing Trading: A trading strategy that aims to capture short to medium-term price movements in a financial asset.
  2. Candlestick: A graphical representation of price movement in a specific time frame, commonly used for technical analysis.
  3. Support and Resistance: Price levels where an asset tends to find buying (support) or selling (resistance) pressure.
  4. Trend: The general direction in which the price of an asset is moving, either upwards (bullish) or downwards (bearish).
  5. Volatility: The degree of price fluctuation in an asset; higher volatility often presents more trading opportunities.
  6. Moving Average: An indicator that smooths out price data to identify trends over a specified period.
  7. RSI (Relative Strength Index): A momentum oscillator that measures the speed and change of price movements.
  8. MACD (Moving Average Convergence Divergence): A trend-following momentum indicator that shows the relationship between two moving averages.
  9. Fibonacci Retracement: A technical analysis tool used to identify potential support and resistance levels based on Fibonacci ratios.
  10. Stop-Loss: An order to sell an asset when it reaches a predetermined price to limit potential losses.
  11. Take-Profit: An order to sell an asset when it reaches a predefined price to lock in profits.
  12. Risk-Reward Ratio: The ratio between the potential loss and potential profit in a trade.
  13. Breakout: A price movement that surpasses a predefined level, often signaling a new trend.
  14. Gap: A discontinuity in a price chart where the opening price is significantly different from the closing price of the previous period.
  15. Bullish: A market sentiment indicating optimism and an expectation of rising prices.
  16. Bearish: A market sentiment indicating pessimism and an expectation of falling prices.
  17. Liquidity: The ease with which an asset can be bought or sold without causing significant price fluctuations.
  18. Trading Plan: A written strategy outlining entry and exit criteria, risk management, and trade objectives.
  19. Position Sizing: Determining the number of shares or contracts to trade based on risk tolerance.
  20. Swing High/Low: The highest and lowest points reached by an asset’s price within a specific time frame.
  21. Moving Average Crossover: A trading signal generated when two moving averages cross each other.
  22. Pullback: A temporary reversal in the price of an asset within an existing trend.
  23. Divergence: A discrepancy between the price of an asset and a technical indicator, often signaling a potential trend change.
  24. Entry Point: The price at which a trader initiates a position.
  25. Exit Point: The price at which a trader closes or exits a position.
  26. Risk Management: Strategies and techniques used to minimize potential losses in trading.
  27. Leverage: Borrowed capital used to increase the size of a trading position.
  28. Swing Trade Duration: The typical time frame for holding a swing trade, usually ranging from a few days to several weeks.
  29. Short Selling: Selling an asset you do not own, with the expectation of buying it back at a lower price.
  30. Day Trading: A trading style where positions are opened and closed within the same trading day.
  31. Entry Trigger: A specific event or condition that prompts a trader to enter a trade.
  32. Technical Analysis: The study of historical price and volume data to make trading decisions.
  33. Fundamental Analysis: Evaluating an asset’s value based on financial and economic data.
  34. Moving Average Envelopes: Bands plotted above and below a moving average to identify overbought or oversold conditions.
  35. Bollinger Bands: Volatility-based bands that help identify potential reversals or breakouts.
  36. Swing Highs and Lows: Peaks and troughs in an asset’s price movement.
  37. ADX (Average Directional Index): A trend strength indicator used to assess the strength of a trend.
  38. Hedging: Using one investment to offset the risk of another investment.
  39. Margin Call: A demand by a broker for additional funds to cover trading losses.
  40. Risk/Reward Profile: An assessment of the potential gain versus potential loss in a trade.

More Swing trading strategies

Here, you can find all our Strategies for Swing trading.

Our Best Swing Strategies

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FAQ:

What are realistic swing trading returns?

Realistic swing trading returns is between 5 to 20%. If you manage a decade with 10-20%, you are pretty good! You have to focus on risk-adjusted returns, i.e., the return and the drawdowns.

Unfortunately, most traders have completely unrealistic expectation. If you are dreaming of triple-digit returns, we believe you are just dreaming. No one can have such returns over a long period without sooner or later having a huge loss.

What are the most successful swing traders?

We believe the most successful swing traders have quantified their strategies (they are algo traders). They use mechanical trading strategies that are both backtested and tested out-of-sample.

Can this momentum strategy be improved?

Yes, this momentum strategy can be improved. We are not oracles, and we are pretty sure there are traders out there who can improve this strategy. Do you have any ideas on how to improve it? If so, please comment below or drop us an e-mail.

Can these Swing trading strategies be improved?

Yes, these swing trading strategies can be improved.

We are not oracles, and we are pretty sure there are traders out there who can improve this strategy. Do you have any ideas on how to improve it? If so, please comment below or drop us an e-mail.

10 free swing trading strategies

You don’t need to be a rocket scientist to make money in trading. However, it takes years to develop experience, but we believe these 10 free swing trading strategies can give you a good idea of how to proceed. However, our best trading strategies are not for free. You can either subscribe to monthly trading edges, or you can buy single strategies.

Conclusion

Swing trading is a trading strategy that aims to capture short- to medium-term gains in a financial instrument (like stocks or cryptocurrencies) by holding positions for a few days to several weeks. Traders typically look to profit from price “swings” or fluctuations within a trend.

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