The difference between a scalper and a swing trader is the time lag. There are of course various opinions of what exactly scalpers do, but typically one should expect them to trade earlier than swing traders. Scalping refers to cutting of the extreme by buying into oversold territory and selling when the market is overbought.
Swing traders wait for the first turn of the tide and enter or exit in the current direction of the market. Swing trading is thus sort of trend trading as it trades trends encapsulated in random or followed by counter trends.
For trading the longer trend, what technique to use for entry and exit? Swing trading the trend is surely a good idea. The swings in trend direction should be of a better size and smoothness, so that swing trading actually works. The swing trading exit method is equivalent to a trailing stop, which means a tight stop here and that is also a good method for trend trading .
What about scalping in a trend? If done in the inner sense of the word, which means without waiting for the price to turn and just going against it, we find a severe entry/exit asymmetry.
For the trend entry the buying of a position into a pullback makes sense, as long as the trend is intact. But selling out of the blue into the rising price is wrong. If you are on a trend, you want to ride it. Anything else would be cutting gainers short and that’s the last thing the trend rider should want.
So, the trend trader may use an asymmetric entry and exit behavior. Buying anticyclically into an upwards trend on a pullback, but selling only after the price goes down again and not earlier just to lock in a gain, is the right thing to do.
One idea to expand this asymmetry is to enter by means of swing trading, for instance with an autotrading signal generator that is expected to yield a gain even in a not trending market. The exit is done with an additional trading rule for switching the swing trading style to a more relaxed growth trading one.
Alternatively the exit could be mechanized like this. If the current swing trade in the direction of the trend is more than x percent in plus, switch off the automatic swing trader. Exit when the price has come back fifty (e.g.) percent of the interim high starting from your entry price. The higher the trend goes, with zigzags of course, the greater will this loose stop limit become.
Trading with the swing trading automaton for the entry frees the trader to do the right stock or commodity selection. If the trend from where you entered it goes relatively straight up, it is even possible to track the best time of a growth stock’s life with this method.
