Best swing positional and long term trading strategy : read now

After learning previous articles now we are in a position to explain about trade setups. Here we shall discuss what is best long term trade, positional trading and swing trade strategy depending up on demand supply zone and trend analysis in different time frame. In this article we shall explain below mentioned points:

1. What is multi time frame analysis?
2. Three standard trade setup:

• Swing trade Strategy
• Positional trading Strategy
• Mid/Long term trade

What is multi time frame analysis?

To use demand and supply zone efficiently we have to do multi time frame analysis of a stock and also have to mark demand and supply zone in each time frame. Here is how to do multi time frame analysis using trend line and D&S zone:

As a standard process we shall analyze daily, weekly and monthly time frame. Depending on the status in different time frame we shall get three type of trade setup.

1. Swing trade: When trend in all the daily, weekly and monthly time frame is up.
2. Positional trade: When daily trend is down and weekly and monthly trend is up.
3. Medium/long term trade: When weekly and daily trend is down and monthly trend is up.

Our first task is to mark Demand and supply zone and draw latest trend line (as per the concept described in Trend line article) in all the time frame.

Below images shows the trend line and demand supply zone in the daily, weekly and monthly chart of HDFC bank.

From the above chart we can say that monthly trend is up, weekly trend is broken and daily trend is down. This is how we have to analyze multi time frame charts using D&S strategy.

Three standard trade setup:

Depending upon the trend in daily weekly and monthly timeframe we shall get three type of standard trade setup as mentioned below:

1. Swing trade: When trend in all the daily, weekly and monthly time frame is up.
2. Positional trade: When daily trend is down and weekly and monthly trend is up.
3. Medium/long term trade: When weekly and daily trend is down and monthly trend is up.

Now we shall discuss each setup in minute details:

swing trade strategy

This type of trade generally last few days to one week. Before entering into a swing trade setup below process may be followed:

• First we have to check latest trend in daily weekly and monthly chart should be up.
• Then we have to mark the demand and supply area in all the mentioned three time frame.
• We have to search for the quality demand zones like zones aligned with Fibonacci levels, trend line, moving averages etc (as described in D&S zone article).
• Have to wait until price fall to these levels and bounce back with reversal candle.
• Volume should support the reversal.
• Most important point here is the daily uptrend should be intact and should not be broken.
• To increase success rate we should not enter the trade in the first reversal candle. We should wait for the day after to see if the price move is supporting reversal (making green candle) and enter the trade after 3 PM.
• Stop loss: Stop loss should be set below the previous swing low. Sometimes stop loss may also be set below the current swing low provided it satisfy other risk assessment criteria. Detail stop loss setting method has been discussed in separate article on stop loss.
• Target: Initial target should be set at the immediate daily supply zone. Later we can trail the stop loss.
• Risk to reward ratio should be above 1:3.
• Other risk aspects have been explained in our article on Risk management and position sizing.

Below we shall discuss a swing trade setup in real charts:

We shall analyze the chart of Vedanta. Daily chart is as below-

Analysis of weekly chart is as follows:

Here also weekly trend is up; supply and demand zone has been marked in the chart. Monthly chart is as follows:

Here also trend is up and monthly demand and supply zone has been marked.

As the trend in all the three time frame is up, we can look for swing trade setup in Vedanta. In the daily chart we can see price is trading far away from trend line. So we have to wait until price fall near the trend line and then any reversal pattern created above the daily trend line. Then we can enter into the trade if risk reward is favorable. Stop loss may be placed below the previous swing.

We can see that in all the time frame supply zone starts from 275. So we can set 275 as immediate target.

Also Learn the other topics of Demand Supply trading strategy below:
Technical Analysis Basics
What is Dow Theory
Candlestick Charts
Bullish Candlestick patterns
Bearish candlestick patterns
Indecision and continuation candlestick patterns
How to use Volume in trading
Method of moving average
RSI Indicator
ATR Indicator
Trend line analysis
Support resistance
Demand Supply zone
Chart patterns
Trading channels gaps
Trading strategy
Trade management and stop loss
Position size and risk

What is positional trading strategy

This type of trade generally lasts one to 2 months. Before entering into a positional trade setup below process may be followed:

• First we have to check latest trend in daily weekly and monthly chart. Monthly and weekly trend should be up and daily trend should be down.
• Then we have to mark the demand and supply area in all the mentioned three time frame.
• We have to search for the quality demand zones like zones aligned with Fibonacci levels, trend line, moving averages etc (as described in D&S zone article).
• Have to wait until price fall to these levels and bounce back with reversal candle.
• Volume should support the reversal.
• Most important point here is the weekly uptrend should be intact and should not be broken.
• To increase success rate we should not enter the trade in the first reversal candle. We should wait for the day after to see if the price move is supporting reversal (making green candle) and enter the trade after 3 PM.
• Stop loss: Stop loss should be set below the weekly demand zone. Detail stop loss setting method has been discussed in separate article on stop loss.
• Target: Initial target should be set at the immediate weekly supply zone. Later we can trail the stop loss.
• Risk to reward ratio should be above 1:3.

• Other risk aspects have been explained in our article on Risk management and position sizing.

Below we shall discuss a positional trade setup in real charts of TCS:

Here is the daily chart as described below:

Here daily trend is down as mentioned in the image. Demand and supply zones have also been marked. Next we shall move into weekly chart. Here trend is up and demand supply zone has been market.

Monthly trend is also up here.

To analyze the trade setup we shall explain the weekly chart in more detail.

Here price trading around weekly trend line. We have to wait for if any indication of reversal is formed here. Once we see this type of condition we should return to daily chart to look for if any new daily up trend line is established or and new demand zone is created.

If any new daily uptrend line or demand zone created, we can enter into trade keeping stop loss below the demand zone and setting target as immediate weekly supply.

This type of trade last almost one to two months and gives good profit potential.

Long term trade/Medium Term Trade setup

1. This type of trading opportunity arises when weekly and daily trend is down and monthly trend is up.

This type of trade generally last for few months to year. Before entering into a swing trade setup below process may be followed:

• First we have to check latest trend in daily weekly and monthly chart. Monthly trend should be up and weekly and daily trend should be down.
• Then we have to mark the demand and supply area in all the mentioned three time frame.
• We have to search for the quality demand zones like zones aligned with Fibonacci levels, trend line, moving averages etc (as described in D&S zone article).
• Have to wait until price fall to these levels and bounce back with reversal candle.
• Volume should support the reversal.
• Most important point here is the monthly uptrend should be intact and should not be broken.
• To increase success rate we should not enter the trade in the first reversal candle. We should wait for the day after to see if the price move is supporting reversal (making green candle) and enter the trade after 3 PM.
• Stop loss: Stop loss should be set below the monthly demand zone. Detail stop loss setting method has been discussed in separate article on stop loss.
• Target: Initial target should be set at the immediate monthly supply zone. Later we can trail the stop loss.
• Risk to reward ratio should be above 1:3.
• Other risk aspects have been explained in our article on Risk management and position sizing.

Now we shall discuss this type of trade setup in real charts of bajaj finance:

Daily chart is as below:

In daily chart trend is down and demand and supply zone has been marked. Below is the weekly zone:

In weekly chart also trend is down and demand supply zone has been marked. Below is the monthly chart:

Here trend is up and price has taken support at the daily demand zone aligned with monthly trend line. Once we see this type of condition we should return to daily chart to look for if any new daily up trend line is established or and new demand zone is created.

Here new daily uptrend line created and we can enter into trade keeping stop loss below the demand zone and setting target as immediate monthly supply.

This type of trade last few months and give good profit potential.

Here we have explained about three types of long trade setup. The process can be applied when trend is down also for short trade as bellows:

1. Swing short trade: When trend in all the daily, weekly and monthly time frame is down.
2. Positional short trade: When daily trend is up and weekly and monthly trend is down.
3. Medium/long term short trade: When weekly and daily trend is up and monthly trend is down.

We shall not explain in details these setups here as these setups are quiet symmetrical like the setup explained above.

After gathering the knowledge of trade setup and other technical analysis topics in details now we can jump into the final phase where we shall learn how to manage risk specific to a trade or for an overall trading account.