Forex Swing Trading Strategy
Forex swing trading strategy is a pattern of trading where forex traders look to capture only one swing of the market movement.
The 3 major trading patterns are;
Position trading
Swing trading and
Swing trading can be said to be the intermediary between the other popular trading patterns.
Swing trading can be employed by people with full-time jobs who do not look to trade 24 hours a day.
Successful forex swing traders only look to capture a lump out of the market movements.
Swing traders are patient individuals with in-depth knowledge of the direction of the market.
Is it profitable to swing trade? What are your trading habits? Are you trading in the zone?
Yes, swing trading is profitable, but you have to master how to swing trade efficiently and effectively.
Is swing trading better than day trading?
Each trading pattern has its uniqueness and disadvantages.
What is swing trading and how does it work?
This post will teach you the basics of forex swing trading and how to swing a trade for profiting.
Forex Swing Trading Strategy
Swing trading is a method used by traders to capture only one swing of the market movement before a reversal occurs.
Swing traders do not watch their gains turn to losses.
They have the routine skills of exiting the trade at the right time with the use of calculated stop loss and profit targets.
How much do swing traders make?
Swing traders are not selfish individuals looking to make all the profit available in the market trend. They only focus on one market swing are quickly out of trades before a reversal.
Is it safe to swing trade?
Yah! You don’t get to stay too long for a whole day or days or weeks trading.
Swing trading vs day trading: swing trading has lesser stress than day trading because you don’t stay in the market all day when you swing trades.
3 Basics of Forex Swing Trading Strategy
These 3 basic principles are employed by swing traders in the 3 major market movements in forex trading.
1. Ranging Market: In a ranging market (when the market price is stuck in between support and resistance), the swing trading principle is applied to make a profit by first identifying the ranging market.
Then, when the price rejects the resistance strongly, a swing trader sells, and also when the price rejects the support strongly, a swing trader buys.
Stop-loss is set above resistance using high of previous candle + 1ATR + SPREAD in a sell order.
Stop-loss is set below support using the low of the previous candle – 1ATR – SPREAD in a buy order.
Profit is targeted before the support level in a sell order and before the resistance level in a buy order.
Swing trading for beginners, as a beginner you should look to exit trade before the resistance or support level to avoid pressure from opposite traders.
2. Trending Market: in a trending market, for example, uptrend (series of higher highs and higher lows) or downtrend (series of lower highs and lower lows), swing trading is also employed to make maximum profit.
This is a move with the trend strategy, first identify the trend (either uptrend or downtrend).
Then look to buy in the uptrend after having a pullback of at least 50% Fibonacci retracement and exit the trade before the 100% mark of the Fibonacci retracement.
You can also exit before the next swing high if you don’t want to use the Fibonacci retracement indicator.
The 50 SMA can be used to determine the trend of the market and this can be used for the pull-back trading strategy for the trending market.
Stop-loss can be set below the lows + 1ATR or above the highs +1ATR in a buy or sell order accordingly.
3. Counter-trend approach: This is the opposite of the second principle, while taking a look at how price moves in the market, it is often noticed that some pullbacks (or retracements) have enough liquidity.
To partake in the pull-backs, a swing trading strategy is employed to benefit from these counter moves.
The advantage of this counter-trend approach is to enable a small stop loss value.
Stop-loss is placed above the high of the previous candle + 1ATR for a sell order or below the low of the previous candle – 1ATR.
Is this swing trading profitable? Yes, just like the previous two.
The above principles are the basics of swing trading strategies.
What is the best swing trading strategy?
I would advise you to experiment with the above three principles and decide whichever works for you best.
What are the realistic swing trading returns?
Always exit before the opposing pressure plays out in the market.
Look to capture only one swing!
Forex Swing Trading Strategy Risk Management
It is essential to always manage risk in forex trading.
Use various candlestick patterns to decide entry and exit of the market
The use of 50 SMA, 200SMA can also be employed to determine the strength of a trend. When the price is above 200 SMA, always look to buy and when the price is below 200 SMA, you should look to sell.
The 50 SMA can be used to trail stop loss.
Fibonacci retracement indicators can be used for pullbacks and continuation of trends.
What is the best time frame for swing trading?
This will only be answered by how much time you’re willing to spend in trading. Personally, I use the 4-hour time frame more.
Why?
I devote more time to forex trading.
Swing trading crypto?
I will also recommend a swing trading strategy for trading cryptocurrency.
If swing trading can work perfectly for beginners, it will also work for dummies. Swing trading for dummies work!
Conclusion
This post has taught you how to employ the method of forex swing trading strategy in your primary trading plan. This should teach you how to profit in the three basic market structures; ranging, trending, and counter-trending.
