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Swing Trading Strategy Example

This example demonstrates a comprehensive swing trading strategy using the Golden Crossover signal (50-day SMA crossing above 200-day SMA) for long-term trend following.

Files​

  • main.py - Entry point to run the strategy
  • strategy.py - Main swing trading strategy implementation
  • signal_manager.py - Golden crossover signal detection
  • position_manager.py - Position manager for swing trades
  • README.md - This documentation

Strategy Logic​

  • Golden Crossover: 50-day SMA crosses above 200-day SMA → BUY signal
  • Death Cross: 50-day SMA crosses below 200-day SMA → SELL signal
  • Position Management: Hold positions for days/weeks (swing trading)
  • Risk Management: Stop loss and take profit levels

Key Features​

  • ✅ Daily Timeframe: Uses daily candles for proper moving average calculation
  • ✅ Golden Crossover Detection: 50-day vs 200-day SMA crossover signals
  • ✅ Swing Trading: Holds positions for extended periods
  • ✅ Multiple Symbols: Can trade multiple stocks simultaneously
  • ✅ Risk Management: Built-in stop loss and position sizing
  • ✅ Signal Manager: Modular signal detection system

Strategy Components​

Signal Manager (signal_manager.py)​

  • Detects golden crossover and death cross signals
  • Uses daily candles for accurate moving average calculation
  • Provides clear signal output with SMA values

Position Manager (position_manager.py)​

  • Manages swing trade positions
  • Implements stop loss and take profit
  • Tracks position performance over time

Main Strategy (strategy.py)​

  • Orchestrates the entire swing trading system
  • Manages multiple symbols
  • Coordinates between signal detection and position management

Usage​

python main.py

The strategy will automatically:

  • Connect to your broker
  • Subscribe to market data for selected symbols
  • Calculate 50-day and 200-day SMA indicators
  • Detect golden crossover signals
  • Execute swing trades
  • Manage positions with risk controls

Configuration​

Symbol Selection​

# Add your preferred swing trading symbols
symbols = [
    "RELIANCE-EQ",
    "TCS-EQ",
    "HDFCBANK-EQ",
    "INFY-EQ",
    "BHARTIARTL-EQ"
]

Risk Management​

# Position sizing (percentage of capital)
position_size = 0.1  # 10% of capital per trade

# Stop loss and take profit
stop_loss_pct = 0.08   # 8% stop loss
take_profit_pct = 0.20 # 20% take profit

Golden Crossover Explained​

The Golden Crossover is one of the most reliable long-term trend indicators:

  • 50-day SMA: Represents medium-term trend
  • 200-day SMA: Represents long-term trend
  • Crossover Above: Indicates bullish momentum
  • Crossover Below: Indicates bearish momentum

Why Daily Timeframe?​

  • Moving averages need sufficient data points
  • Daily candles provide stable trend signals
  • Reduces noise from intraday volatility
  • Perfect for swing trading timeframes

Signal Detection​

The strategy detects two key signals:

🟢 Golden Crossover (BUY Signal)​

Current: SMA 50 > SMA 200
Previous: SMA 50 ≤ SMA 200
→ BUY Signal Generated

🔴 Death Cross (SELL Signal)​

Current: SMA 50 < SMA 200
Previous: SMA 50 ≥ SMA 200
→ SELL Signal Generated

Position Management​

Entry Rules​

  • Enter long position on golden crossover
  • Exit position on death cross
  • One position per symbol maximum

Risk Management​

  • Stop Loss: 8% below entry price
  • Take Profit: 20% above entry price
  • Position Sizing: 10% of capital per trade

Performance Tracking​

The strategy tracks:

  • Total trades executed
  • Win/loss ratio
  • Average holding period
  • Maximum drawdown
  • Total P&L

Example Output​

🟢 GOLDEN CROSSOVER DETECTED for RELIANCE-EQ
Current SMA 50: 2450.50
Current SMA 200: 2420.75
Previous SMA 50: 2418.25
Previous SMA 200: 2425.10
==================================================

🔴 DEATH CROSS DETECTED for TCS-EQ
Current SMA 50: 3850.20
Current SMA 200: 3865.40
Previous SMA 50: 3870.15
Previous SMA 200: 3860.25
==================================================

Best Practices​

Symbol Selection​

  • Choose liquid, large-cap stocks
  • Avoid highly volatile stocks
  • Focus on fundamentally strong companies
  • Consider sector diversification

Risk Management​

  • Never risk more than 2% per trade
  • Use position sizing based on volatility
  • Set appropriate stop losses
  • Take profits at predetermined levels

Market Conditions​

  • Golden crossover works best in trending markets
  • Avoid trading during high volatility periods
  • Consider market sentiment and news
  • Monitor economic indicators

Next Steps​

Disclaimer​

This is an educational example. Always:

  • Test strategies on paper trading first
  • Understand the risks involved
  • Consider your risk tolerance
  • Consult with financial advisors
  • Never invest more than you can afford to lose