Forex Swing Trading

Forex swing trading is a strategy that many traders use which utilizes a medium time frame. Traders who successfuly utilize this trading strategy can make substantial amounts of pips within only a few days. Here are the basics of swing trading and why you might want to consider it for your arsenal.

What Is Swing Trading?

Swing trading is a type of trading that attempts to find a trend and take advantage of it. With this Forex trading strategy, you get into a trade with the thought of staying in it for anywhere between one and four days. This makes it a longer-term approach than Forex scalping and it is not as long-term as some of the other Forex trading systems out there. By comparison, some trading strategies leave trades open for weeks or months. With swing trading, all of your trades will usually be closed within a week or less.

How Trades are Chosen

When using this type of trading strategy, traders use Forex technical analysis to determine when to get into and out of a trade. They use technical indicators such as the MACD and Bollinger Bands to make trading decisions. Most swing traders do not pay attention to the fundamental analysis in the market. For example, they may only pay attention to economic news announcements that are expected to have a big impact. Other than that, they use technical indicators only to figure out the market.

Pros

One of the major advantages of using swing trading is that it typically does not take up much of your time. Many swing trading strategies only involve 10 to 15 minutes per day of checking the charts. You usually check the charts, see if they meet the criteria for your trading system and then decide whether to place a trade.

Another advantage of this type of strategy is that it can catch large swings. Typically, most of the trends in the Forex market take place within a few days. If you get in on the front end of the trend, it is possible to ride this trend to a large win.

Drawbacks

One of the potential drawbacks of using swing trading is that you may not get in on the beginning of a trend and you may be slow to get out. Since this is a longer-term trading strategy, it may be several hours before you place your trade or close it out. In that amount of time, the market could have moved substantially against you.

Systems

While you could always develop your own Forex swing trading strategy, many traders rely on commercial systems to help them navigate the market. If you are interested in finding a strategy, be sure to check out our Forex trading strategies section and find one for yourself. Some of the more popular swing trading strategies are the LMT Forex Formula and the Sniper Forex system.


Return From Forex Swing Trading to Forex Trading Systems

Return From Forex Swing Trading to Forex Trading