Once swing traders have confirmed the trend, they are looking to place trades in the direction of the trend. Can you trade against the trend? Sure, it can be done but doing so increases the chances that the trade will be a loser instead of a winner. Follow the smart money and only trade with the trend until you are confident you can counter-trend trade effectively.
Swing traders typically are waiting for price to pullback and retrace. Why? They want to get into the market at a good price. By getting in at a good price, this only adds to the odds that are already stacked in their favour. What this means is that you won’t be placing trades to enter randomly, even if they are in the direction of the main trend. Timing is important. You are looking for value in the market and when you believe there is value you enter your trade.
Value, or a good price, is usually available when price retraces down after it has been moving with the trend. It is at these times when price retraces that swing traders are looking to enter the market. Even if price has retraced, you are not looking to enter the market hap hazardly. There should be confirmation or signs that you believe price will continue from its current point of retracement in the direction of the trend.
This is where support and resistance, trend lines, fibonacci and to some extent indicators can come into play. These tools allow traders to examine the market and decide if there is enough reason to confirm that price is expected to bounce from its current point of retracement and continue with the trend.
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