Have you heard of swing trading? Unlike day trading, a swing forex strategy focuses on mid-term returns. Compared to intensive day trading, swing trading allows you to lay back for days, sometimes weeks, as long as you’ve conducted ample analysis before opening a trade and have a firm grasp of the currency trends.
What is Forex Swing Trading
Typically, a swing trade can last from days to several weeks. Simply put, swing trade tries to ride the rising tide of a currency to profit, following our usual “buy low, sell high” strategy in the forex game. Instead of closing out the trade at the end of the day, you bet on a currency’s growth potential and let the trend develop further for higher profits.
However, it is still a fast transaction compared to long-term positioning, therefore, swing trading is a good medium option for those wanting more profits but still would like to pull out of the trade quickly.
Pros and Cons
The biggest advantage of swinging is how it frees you from constantly monitoring a currency’s behavior. Instead, you rely on your comprehensive understanding of the global market. For the same reason, swing trading has much fewer ambiguities. It is a highly technical trading style that comes with clear boundaries.
Nonetheless, swing trading is naturally risky due to its higher complexity. It is a more advanced trading method and is not suitable for new traders.
Swing Forex Strategy Best Practices
Fortunately, there are quite a few best practices when it comes to the right strategy. Here, we will choose a few popular ones to look into.
CCI Moving Average (MA)
If you’ve been an active day trader, you must be familiar with the scalping strategy, which heavily relies on MAs as indicators. The same system can be easily implemented to swing trading using a 7 EMA and a 14 EMA, which uses the two MAs’ relative position as buying and selling signals.
Bollinger Bands
This strategy is one of the simplest strategies suitable for swing trading. It also uses an MA indicator to reflect a currency’s trend. Usually, the trader finds the middle Bollinger Band line as the threshold. When the price touches the middle line, the trader places a tentative sell stop slightly lower to see if the market is in a downtrend.
Gartley Pattern
The Gartley Pattern is suitable for those who are more ambitious as the strategy is designed for you to buy at the lowest bottom and sell at the peak. It uses the Fibonacci numbers of ratios as its core fundaments. The pattern happens when a trend temporarily reverses, creating either a price dip or a sudden peak, before resuming in its original direction.
Trendline Trading
Trendline is often recognized as the best swing trading strategy, and it is surprisingly simple to implement. As indicated by the name, you simply draw a trendline then wait for the price to hit the threshold.
Conclusion
Of course, knowing the best swing forex strategies alone isn’t enough. Forex swing trading is a complicated investment requiring deep understandings of the global market and high technical analysis capabilities. However, once you get familiar with it, you’ll realize swing trading is much clearer than other trading methods. Again, be patient and do your research. Because swing trading lasts longer, you will be making a larger deposit than you would with day trading.
0 comments