Despite a lot of new trading strategies that have been invented in the Forex Trading world, swing trading is still have many users that implement it on regular basis to gain steady winning trades day after day; but apparently, this strategy is less popular among novice traders who aim for quick profits.
Swing trading is a method where the trader is placing buy or sell order close to the end of an up or down price swing that happened due to the market volatility in a given time. This position can last for a couple of days or just one day; depend on the market movement and the targeted profits. It is a strategy that executed based on technical analysis, so you don’t really have to understand about world economic or such; read more about technical analysis at currency trading strategies.
With this method, there are a few important things to consider:
1. Support and Resistance
Don’t rush when you’re trying to identify support and resistance level, do a couple of tests just to be sure.
2. Using the Data
It may be called ‘swing trading’, but that doesn’t mean there is only one way to execute it; here are some method that have been used by many swing traders:
- Aiming for the time when the currency turn away from support or resistance, then place the order after make sure that the movement is price momentum.
- Wait for the price to break through the “pivot line”, identify it as uptrend/downtrend, then buy/sell accordingly.
- Using Fibonacci extension tool or just look for nearby pivot point to look exit point from the market.
3. Methods and Indicators
- Stochastic and RSI (Relative Strength Index) to identify momentum.
- Fibonacci, pivot points, and fractal measurements to identify entry point.
- MACD (Moving Average Converge Divergence) as additional tool for confirmation.
4. Taking Profit
How much profit to aim should be adjusted with the current market condition. If the market is trending or volatile, you need to get in, grab as much as you can get (within safe period), and get out quickly. This is important since as the market keeps moving, there is high chance that you’ll get a reversal. You’ll need forex trading platforms that can executing order quickly for this.
The other scenario: the market is relatively calm and not going in any particular direction; in this condition, you should switch to longer term swing trade that last for more than three days. Of course, your target profit will be a lot bigger with this method.
Many novice traders choose short term strategies because they want easy and fast profits, but here’s the hard fact: it is really difficult to make numerous small trades and keep maintain good winning rate. Instead, if you’re just started trading forex, you should go with swing trading since it offer simple analysis and relatively safe way to earn steady profits. Learn more about a course on how to use swing trading strategy to aim large profits at forex wealth builder review.
