Located somewhere between trend trading and day trading, swing trading is in a class all its own. It is one of the main styles of trading, trend and day being the other two, and is excellent for people who are new to the foreign exchange market. Day traders make quick trades. Sometimes they will only hold a position for a few short minutes, and sometimes for a few hours, but they will never keep a position overnight. Trend traders will hold their positions much longer, sometimes for weeks or months. A swing trader rests somewhere in the middle, holding positions anywhere from a single day up to several days.
We can suggest you to learn from excellent traders how to create Swing orders at swing webinars – see example:
In order to be successful, swing traders need to make the right decision about what currency pair to choose. After all, if you’re only going to be holding onto a position for a few days, you shouldn’t be picking a pair of currencies that see little movement. It’s better to choose an active currency pair. Swing traders will be able to do just that, ride currencies that are swinging in a certain direction. Then, when the currency begins to reverse, traders can make a trade.Swing trading stands out as a special type of trading that tries to increase profit probability while the prices keep shifting from one price to another. As a difference with day trading, a trader will usually hold off on selling the currency for around 5 or 6 days. Even so, how much the investor will hold the trade will depend on current market situation and profit making possibilities. Swing trading is linked with different strategies that determine profitable sales and all that want to use it will go through a lot of risk.
If you end up in a market that isn’t swinging quite as much because of a bear or bull trend, then it may be more difficult for swing traders to make trades. In these types of markets, currencies can remain stable for some time. Normally, in these markets, you can wait until the currency begins to move again. Sometimes you will have to use short term trends instead of trading on longer trends but you can still profit from this practice.
Because of this, if you’re going to use a swing trading method, you should prefer a market that is relatively stable. Currency pairs can rise and decline in a relatively steady pattern over several days. Currency pairs might stay consistent for quite some time, even months, but during that time, if you are trading based upon the swing; you will have a number of opportunities to trade as currencies fluctuate between resistance and support points.
How to prepare for a trade and identify a swing?
I can suggest you to read learn swing trading strategy from dailyfx strategists.Another great and short article is How to Trade Market Swings from Walker England.
Swing Trading Tips
Use Popular Currencies or pairs that you know the best – A good swing trader will mostly focus on currency pairs that are often traded. The currency pairs that are not really popular are hard to use because it is difficult to determine pessimistic or optimistic trends. It is always recommended to analyze upward trends that are noticed with popular currency pairs.
Holding the Trades – Currencies are going to trade better if you can keep hold of them for a longer time period. But if momentum is against you trades needs to be closed. Than good traders wait for better entry position. Example : I made sell order 1.361, stop loss 1.368, target 1.348. My risk reward ratio was 1:2. I saw that market is against me and strong bullish momentum is bad for my trade and I close trade with 20 pips loss.Than I made another sell position afther two days and got 300 pips profit.
Always Follow News – Successful swing traders need to always be aware of the newest market trends that appear. Because of this it is necessary to subscribe to blogs or sites that offer forex news. If you want to sell instrument in bullish trend and you make order but you see new against you, close the trade and wait for better price level.
Planning Trades – It is necessary to plan all trades for the day that follows. You should base the plan on market trends knowledge. All investors have to think about creating a good trading style that will suit their personality.
When going through swing trading it is crucial that you maintain patience and plan ahead. Always think about the most profit that you can make by analyzing all that can happen. We recommend that you first use demo accounts in order to practice swing trading to get an idea of what to expect when trading for money.