It pays to be on the right side of a trending market. Whether you’re a day trader or a swing trader, or if you’re trading futures, forex, or stocks, swing highs and swing lows make up the foundation for a trending market and can be found on any price chart on any timeframe. The Topstep coaches are here to give you a short lesson on how to spot them and how you can use them to your advantage.
Here’s What Our Coach’s Have To Say
Trader Shout Outs
Topstep Funded Trader Doug D. is having a pretty great week. Not only did he rack up a monster $2,300 day, he also requested an $8,000 withdrawal. We've said it before, it's nice to watch your P/L grow, but it doesn't mean much if you don't pay yourself. Nice job Doug!
The Highs and Lows of Swing Highs and Lows
If you’ve never heard of swing highs and lows before, here’s the “textbook” definition. A swing high is made when a price bar prints a high and is followed by two consecutive price bars with lower highs. Inversely, a swing low is made when a price bar prints a low and followed by two consecutive price bars with higher lows.
Now, not everyone believes that the sequence of price bars needs to be exact in order to confirm the pattern, mostly because a lot of times it doesn't follow that exact pattern. But, when it’s obvious that a high or low has been made and you use that point to plot a trendline on your chart, then you can assume it’s either a swing high or low.
Because these levels are used to draw trendlines, being able to identify them can give you a sporting chance of getting ahead of the market. It’s not an exact science, but when a market is trending higher and a swing high is made, it could be an indication that a pullback is coming and it might be a good idea to start looking for buying opportunities.
There are no guarantees in trading, so understanding how to pick out chart patterns and knowing how the market historically reacts around those patterns is one of the best advantages you have. Trade well!