What is swing trading and why it matters

Swing trading is a medium-term trading approach that aims to capture price moves over several days to a few weeks. It sits between intraday scalping and long-term investing, allowing traders to take advantage of trends and reversals without constant screen time. For the NAS100 (NASDAQ-100 index), swing trading is useful because the index is liquid, tech-heavy and prone to medium-length directional moves driven by earnings, macro data, and sentiment—conditions that suit candlestick analysis and momentum confirmation.

Workflow

1. 1. Identify market trends using candlestick patterns.

   Start with higher timeframes: daily and 4-hour candlestick charts for NAS100 to identify the prevailing trend. Look for sequences of higher highs and higher lows for uptrends, and lower highs and lower lows for downtrends. Use candlestick patterns to refine the view: bullish/bearish engulfing, pin bars (long wicks), morning and evening stars, and trend-continuation candles. Pay attention to candle context around key levels (moving averages, previous resistance/support, round numbers) rather than isolated patterns.

2. 2. Confirm entry points with momentum indicators.

   Combine candlesticks with momentum indicators to avoid false signals. Common choices on NAS100: RSI (14) for overbought/oversold and divergence, MACD for crossovers and histogram momentum, and ADX to assess trend strength. For entries, look for confluence: a bullish candlestick pattern near support with RSI rising from oversold or MACD histogram turning positive. For breakouts, confirm with increasing momentum on volume or MACD acceleration. Avoid entries when indicators conflict with price structure.

3. 3. Set stop-loss orders to manage risk.

   Define stop-loss levels before entering a trade. Methods that work on NAS100 include ATR-based stops (e.g., 1.5–2 ATR), placing stops beyond the low/high wick of the reversal candle, or fixed percentage risk per trade (commonly 0.5–2% of account). Combine stop placement with position sizing so that dollar risk aligns with your risk tolerance. Use wider stops in higher-volatility sessions (earnings or macro events) and tighten them in stable sessions.

4. 4. Execute trades based on key levels.

   Execute trades at logical price levels: support/resistance pivots, trendline touches, moving average confluences (50/100/200 EMA), and Fibonacci retracements. For NAS100, watch pre-market levels and major US session open reactions. Entry techniques include: entering on pullbacks to a level after a confirming candle; waiting for a breakout and entering on a retest; or scaling in with partial entries on initial signal and adding on confirmation. Use limit orders to control slippage; use market orders only when speed is essential and spread is acceptable.

5. 5. Review and adjust trading strategies regularly.

   After each trade cycle (weekly or monthly), review outcomes. Track metrics: win rate, average reward-to-risk, drawdown, and maximum consecutive losses. Analyze losing trades to determine if failures were from setup, execution, or market regime changes. Adjust parameters—timeframes, indicator thresholds, stop placement—based on objective data, not emotion. Re-calibrate for different NAS100 volatility regimes (e.g., calm vs. event-driven periods).

Common mistakes:

• Ignoring the dominant market trend and trading counter to higher-timeframe structure.
• Not using stop-losses or moving them arbitrarily, which increases emotional risk and larger losses.
• Overtrading during high volatility—entering on noise rather than confirmed setups.
• Relying on single indicators or isolated candlesticks without context or confluence.
• Failing to adapt strategy to NAS100 volatility spikes around earnings or macro events.

Checklist:

• Daily trend analysis: check daily and 4-hour candles for structure and bias.
• Set clear entry and exit points before placing trades, including target levels.
• Use candlestick patterns within context—support/resistance and trendlines.
• Confirm signals with at least one momentum indicator (RSI, MACD, ADX).
• Set stop-loss using ATR, candle structure, or fixed percentage and size position accordingly.
• Record every trade in a trading journal: rationale, screenshots, results, lessons.
• Review performance periodically and adjust rules to reflect market regime changes.

Follow this structured workflow to manage risk and improve consistency when swing trading the NAS100 with candlestick charts. Discipline, confluence, and regular review are key to turning setups into repeatable results.