Swing Trading as Forex Strategies
One of the forex strategies that you can use is swing trading and you need to know more about this strategy. Swing trading is considered by a lot of traders to be a great in-between strategy for traders not wanting to trade short-term or long-term. This medium-term strategy is the ideal for people looking for a fundamental and technical strategy.
What is Forex Swing Trading
To be successful with any trading strategy you have to choose the right currency pairs to trade. Certain currency pairs work well with short-term trading like scalping while other work well with long-term trading like fundamental trading. The best currency pairs for swing trading are those with high volatility. When the market is active the currency pairs should swing between defined highs and lows. Swing trading is all about riding the waves in a single direction for a number of days. The only time you close the position is when the currency pair trend swing in the opposite direction.
The Right Market for Forex Strategies
The forex market has times when it is trending and times when it is ranging. You need to identify which conditions best suit your trading strategy. Day trading is best during trending markets because the large movements allow the trader to make a profit. However, long-term traders actually need to have a range market because they are looking for a slow build up of profits.
The swing trader actually needs a range market to be successful. The fact that all the trades last longer than a day means that they cannot make money off the short-term trends in the market. The indicators that the swing trader uses only trigger during range markets which covers 80% of the market open times.
The Tools You Need
All traders need to have their trading tools that help them identify when to enter the market. The swing trader uses technical and fundamental analysis to find indicators. The fundamental analysis helps them identify when a swing in the market may comes. This is generally centred around high impact news. The technical analysis of the hourly, daily and weekly charts allows them to find their entry and exit points.
The technical analysis methods which are used often include Bollinger Bands and moving averages. Many swing traders also use MACD charts to help identify waves in the market. There are different strategies within swing trading that use different technical analysis methods that you should know about.
When to Take Profits
Swing trading works in the channels created by the technical analysis. Most swing traders take their profits when the trend is close to the upper or lower channel line. The exact point can be determined through technical analysis. There are many swing traders who only use a vague area for their exit point instead of a precise number. Of course, these traders do have very solid stop loss points in case they wait too long to take their profits.
Swing trading is something that traders should consider if they do not want to use day trading or fundamental trading. This trading style combines fundamental and day trading to create a medium term trading solution.
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