Stocks, currency pairs and other binary assets exhibit strong trends. Swing trading is a way for options traders to take advantage of these trends. Actually, swing charting is a common tool that traders use to recognize trends. Let’s take a look at how to draw swing charts and then make use of them to make more money trading binary options.
Swing Chart Construction
Swing charts consist of price bars that reflect price behavior in a certain time period. Basically, it is in the form of a bar chart.
As you might have already known, the price range is represented by the vertical lines in the above chart. Additionally, there is a left and right hook on each of the vertical lines. The left hook indicates the opening price and the right hook represents the closing price during a given time.
Gann Swing Charting Method
Swing charts are drawn by utilizing highs and lows. Now there are several ways to do this, but we are going to go with the well-known and effective Gann swing charting technique at this time.
In the chart above, the green vertical lines reflect the up day with a higher high and higher low. Then there is the red line which indicates the down day (lower high and lower low).
There are also inside days and outside days signified in the chart. An inside day is basically a lower high and high low which is the black vertical line. On the other hand, the blue line represents the outside day (higher high and lower low).
The key is to focus solely on price action after constructing the swing chart. This will help greatly in locating the start and end of various trends.
Bottom line: “The trend is your friend.” Swing charts help you in finding it.
We’ve been over ample times on XForexTrade about how riding the trend can bring massive profits. Swing charts are perfect for easily and conveniently locating these trends, making the trader’s job quite simple.
There are actually different ways to apply this technique – Elliott Waves and kagi charts are some examples. I want to further improve the trend-finding abilities of binary options traders, so I look to continue this discussion as we go along.
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