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How Technology is Useful to Swing Traders by@mignonette-garnier

How Technology is Useful to Swing Traders

Mignonette Garnier HackerNoon profile picture

Mignonette Garnier

mignonette has been writing articles for technology for five years.

Technology has a huge impact on our everyday lives, especially for traders. From the moment you wake up (to check how the market behaved overnight), to the moment you go back to sleep (to check how markets will open on the other side of the world), technology plays a huge role in ensuring that every trader has the necessary tools and resources to create a successful career.

Advanced technology has been the key factor in transforming the way things are done, especially for financial markets. It is the core of how traders operate and maintain their competitive edge in a cutthroat financial market environment.

In this digital age, trading continues to evolve due to innovative technology. Here are a few things that have become very useful for traders due to technological innovation.

1. Ease of Access

After numerous surveys, it has become clear that industry experts and players agree that technology has made trading more accessible to people across the world. Both private and retail traders have access to financial markets and equal opportunity to participate in the industry. This has been very well received because a few years back, only institutional players could trade.

According to Kara Ordaway, a financial markets analyst, technology has streamlined trading and opened doors to the masses, giving the necessary tools of the trade to professionals and non-professionals alike. Anyone who has an internet connection, regardless of their location, can now access live streaming prices and manage their own portfolio.

Stephen Innes, a senior currency trader and FX broker, expressed a similar view. According to him, FX trading gained significant traction after the financial crisis of 2008 and it is definitely flourishing now. This is quite a significant change due to the accessibility because Electronic FX trading has been in vogue for the past decade.

While trading used to be the domain of institutional and corporate players, retail and private investors can now make it an essential component of their overall portfolio. This has been made possible due to the ease of access and price transparency offered on the electronic platform.

2. Competitive Landscape

Technology has forced brokers and platform providers to continuously offer more and make the trading experience easier. As a result, providers are always adding new features and building more changes to their platforms to attract and retain clients. Before increased competition, candlestick charts were a feature that was just good to have but today, a charting platform is especially important for every trading platform for traders to do long and short position trading.

These small but significant changes have over time transformed trading as we know it, making it easier for professional and non-professional traders to analyze financial markets and make any decisions they deem fit. This competitive landscape has made it possible for traders to have access to numerous tools and resources that would have previously been impossible to access.

3. Freedom and Flexibility for Traders

Technology has ensured that traders have more freedom. Today, traders can monitor their trades from anywhere as long as they have an internet connection. This gives them more freedom, mobility, and flexibility to work from any location they please, as well as run other businesses.

It is also important to consider the amount of information that traders have access to today. Financial markets are affected by numerous factors, and when traders have access to information at all times, then it becomes easier for them to study the markets and make a profit. Information and data can be expensive, but technology has leveled the playing field by making information and market data instantly accessible and available.

4. Faster and Automated execution

The efficiency of automation has really benefited financial markets and the trading industry. Automation has brought significant changes to what used to be a manually intensive transaction-based process. Faster and automated execution has eliminated the need for dealer intervention, which means that there is little to no chance of traders missing trades.

On today’s platforms, the dealing procedure has been fully automated, therefore reducing the need for big teams of dealers to manage trades. For the trader, automation means that they have access to expert advisors, which is slowly becoming the norm in the trading industry.

With automated trading, traders can walk away and let their strategies play out, therefore reducing emotion leads to trading. Faster and automated execution has changed the trading landscape because most platforms offer different types of orders that can be pre-set and triggered automatically when certain conditions are favorable.

So has technology made swing trading easier?

Swing trading is a trading style where positions are held overnight and can be held for days or weeks as long as the trade goes in the expected direction for profits. Using the best indicators for swing trading, traders can exit the market with small profits before a huge trend shift. As such, it is very important for swing traders to stay on top of market trends. This has been made easier by technology because traders can use charting to keep track of the market regardless of time or location, as long as they have a reliable internet connection.

Swing trading comprises numerous strategies and behaviors. Traders who opt for swing trading operate with larger time frames and are not interested in short-term price volatility. As such, swing trading indicators are essential for swing traders to assess financial markets.

Indicators are essential in helping traders figure out whether the trend is bullish or bearish, and these indicators are imperative to determining the entry and exit points. For traders, having this information is very important because it affects the profits one gets.

Here are three important swing trading indicators:

1. Trend indicators: these are the indicators that show the direction in which the market is going. They are used to smooth price volatility to highlight the primary trend. The most well-known trend indicator is moving averages.

2. Momentum indicators: these are the indicators that are used to show how strong a trend is and whether a trader might expect a reversal. Momentum indicators can also show overbought or oversold levels. The most well-known momentum indicator is the Relative Strength Index (RSI).

3. Volume indicators: these indicators show how many traders are buying or selling an asset at any given time.

With indicators, swing trading becomes easier to navigate. However, not every indicator works for every swing trader. Here are the best swing trading indicators:

Best Swing Trading Indicators

These indicators are considered the best because they are simple and give efficient trading signals. However, it is important to note that these indicators do not guarantee consistent profits, but they can be used to help traders to better visualize the past and the present.

1. Relative Strength Index (RSI)

This indicator can be found under the category of Oscillators on your chart. It calculates the magnitude of the latest price changes and traders mostly use it to determine overbought or oversold levels of an asset.

With the ever-evolving trading platforms, technology has made it easy to check the RSI within a few minutes. Therefore, making it easier for traders to make effective trading decisions without relying on gut feelings or emotions.

2. Moving Average

The moving average is used to calculate the average of an asset’s price movement over a given period of time. As such, it is important to note this indicator relies on past price actions and it is very useful in helping traders to determine trends instead of predicting future moves.

3. Bollinger Band

This is a momentum indicator that consists of two standard deviations (a positive and a negative one) and a moving average. This indicator is a favorite among swing traders because it quickly detects a trend, the volatility, and overbought and oversold levels. Bollinger bands work well in trending markets, but they can also be useful where the price ranges.

Using today’s technology, traders can easily see financial market trends and predict future moves based on history.  The Bollinger band is a simple indicator that can be easily used on various charts as long as the trader has access to the internet.

5. Volume

Although most beginners ignore this indicator, swing traders use volume to see how many traders are buying or selling an asset at any given time. Although it may seem irrelevant, it is common knowledge in the trading landscape that the higher the volume, the stronger the trend. This offers insight into how robust a newly formed trend is.

Technology has really transformed the trading landscape by making it easier for all kinds of traders to have access to the best indicators in order to ensure their success. Although most traders find it normal to have access to critical information and data, this was not the case years ago. The continued evolution is expected to make trading easier and more profitable for anyone who is interested. Given the right tools and resources, anyone can easily become a successful trader regardless of the financial market they choose.