Swing trading is where you open your position from a day to several weeks. In the world of foreign exchange where everything can happen really fast, it’s quite risky to have an open position for that long, thus you’ll need reliable swing trading strategies. There are a lot of swing trading strategies out there, but it is best to choose the one that match your trading style.
Identifying the Trend
The objective of swing trading is entering trades in the direction of a major trend. Therefore, pinpointing the trend is an extremely important first step to master for a swing trader. The earlier you can identify the trend, the higher your chance to generate massive profits.
The problem is aside from identifying a trend, you have to be able to avoid whipsaw (a condition where a sharp price movement is quickly followed by sharp reversal) too.
It can be misleading and looked just like the market is trending, so make sure you can avoid it. These are several common methods to discover trends:
- Utilizing indicators: probably the most popular indicators are Moving Averages and Relative Strength Index.
- Price Action Trend
- Pivot Point Trend
I recommend using 15 minutes and 4 hours charts for this.
Anticipate Pullback
When you determine the main trend, don’t rush and put your order. Wait for some type of pullback first to secure a beneficial entry point. By watching for a good price level before truly stepping into the market, you’ll get in at a good price and have much better opportunity to score profitable trades.
Stop Loss Order
Any good trader implements strict risk management and stop loss is one of it. For stop loss, simply use the most recent swing high or swing low. Ensure you place your fund in a trusted broker that will not overlook your stop loss. Take a look at them in top rated forex broker .
Exit Point
The simple way is to aim for exactly the same quantity of the pips you are risking. Example: if your stop loss is 20 pips below your entry point, then simply set twenty pips above your entry point as the exit point (take profit order). Obviously, it’s possible to aim higher than the quantity of pips you risk; it’s all up to you.
This is just one example since there are a lot of swing trading strategies out there. A few of them might require you to learn more advanced techniques or utilizing more sophisticated software; nevertheless, if you’re still learning, it is advisable to stay with one currency pair and get used to it. Also, know the best time to trade for that specific currency pair.
You’ll find thousands of methods and strategies, but the point in swing trading strategies is just identifying a trend and follows it. As simple as that. The difference is just in how it is being applied, so you’ll want a strategy that matches your trading style. Learn more about various strategies on trading system in currency trading .
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