Swing traders have a very different approach and they typically trade on the higher time frames (4H, Daily +) and also hold trades for longer periods of time. Thus, swing-traders should first choose a SMA and also use higher period moving averages to avoid noise and premature signals. Here are 4 moving averages that are particularly important for swing traders:
- 20 / 21 period: The 21 moving average is my preferred choice when it comes to short-term swing trading. During trends, price respects it so well and it also signals trend shifts.
- 50 period: The 50 moving average is the standard swing-trading moving average and very popular. Most traders use it to ride trends because it’s the ideal compromise between too short and too long term.
- 100 period: There is something about round numbers that attract traders and that definitely holds true when it comes to the 100 moving average. It works very well for support and resistance – especially on the daily and/or weekly time frame
- 200 / 250 period: The same holds true for the 200 moving average. The 250 period moving average is popular on the daily chart since it describes one year of price action (one year has roughly 250 trading days)
