In swing trading, it is very important for you to use the trending indicators for a trending stock or security and a ranging indictor to a ranging stock or security. Before swing trading a stock or a security, you need to determine whether the stock or the security is trending or ranging. You need to do this right in order to make your swing trading a profitable success.Get these Swing Trading Informants plus the 100 page PDF Forex Profit Accelerator End of Day Trading Kit FREE. Download the Insider Secrets of Successful Traders Report FREE that has been downloaded more than 73,000 times discover a Stock Trading Strategy that can turn your $2,000 into $1.7 million in just under 1.9 years. Watch these Stock Market Training FREE video series that show 4 low risk, high probability profit pockets in any stock chart. This free stock market trainin video series is a gift from Bill Poulos!
When you eyeball the security chart, you are not every sure. It is a subjective thing that depends on the time frame that you are using on the charts. Suppose you are eyeballing on the one hour chart. The security may appear to be trending. But when you try to eyeball it on a daily chart, the security may appear to be ranging.
If the ADX is below 20, the security is in a trading range and if the ADX is above 30, the security is considered to be trending. Readings between 20 and 30 are mostly ambiguous. When the reading is between 20 and 30, if the ADX is rising and above 20, you can take it as trending. And if ADX is falling and below 30 but above 20, you can take it as the security is in a trading range.
As long as you are not able to determine whether the security is trending or non trending (ranging), you should avoid planning any sort of a swing trade or for that matter any trade at all. The onus is on your to determine whether the security is trending or non trending. The best way is to use the ADX indicator !
