Why swing trading is not the right strategy in 2016


The stock markets do not leave investors positioned in the medium and long term any respite. Indeed, with these many economic and social changes, investors fear the worst

regarding their positions. We will therefore have to ask ourselves whether swing trading has indeed died this year. Brexit has an important place in answering this question, leaving an uncertain future for European companies based in Great Britain and concerning English companies based on their territory and in Europe.

Looking back on a rather complicated year

euroAt the beginning of 2015, the equity markets began to see the end of their upward movements. Having lasted more than 7 years, swing traders had the opportunity to make a lot of profit during this period. Some stock market indices could take up to 50% in 4 months. In the Forex market it was also good to be a swinger given the drop in the euro seen day after day.

After a sharp rise in markets, having reached their peak, they began to give strong sales signals month after month and those concerning a large part of European indices.

Since August 2015, it had been difficult to position itself in the long term due to the really wide price differences. The markets were not stabilizing and there was no longer any directional aspect. As soon as a stock or commodity was on the rise, it would fall immediately afterwards. The price variations were really significant. All the more reason to focus on the short term.

Forex and Gold presented good swing trading opportunities

Forex has opened up many opportunities, especially with the GBP/AUD currency pair. Indeed, from mid-February 2016 to mid-April 2016, the GBP/AUD currency pair lost nearly 8.7% and increased by nearly 7.06% from mid-April to mid-May 2016. These performances are rare in the Forex market in such a short period of time. As a result, we can say that swing trading is indeed present on the Forex market but dead on the equity market which evolves in a much more uncertain way.
gold pepiteAs for the evolution of gold, it has been beneficial for swing traders thanks to its long-term evolution. The price of gold returned to its zone at 1060 USD/ounce. Some time ago, gold reached the 1300 USD/ounce mark, something that had not happened since 2012. In addition, Brexit encouraged investors to invest their money in gold, which is considered a safe bet in the event of indecision on the markets and the future of a currency pair. Thus, due to the panic movements linked to the British referendum, the price of gold has been rising steadily lately.

Adapting is the key to success

Volatility is the trader’s best friend and the portfolio manager’s worst enemy. In the event that markets leave our comfort zone and volatility is higher, it is better to focus on a short-term and very short-term strategy rather than a long-term strategy. Intraday and scalping seem to be the best strategies to adopt in order to generate profits in 2016 on the equity market.