Swing forex trading strategy is a type of trading that aims to acquire gains in a stock. It also seeks to capture a swing or a single move with the help of daily and weekly timeframes. This is ideal for minimizing losses by closing a trade just before the occurrence of market pressure.
WHAT ARE SWING TRADING STRATEGIES
Though there are countless ways to do swing trading, there are several tested and guaranteed approaches guaranteed to be effective.
- SWING TRADING BREAKOUT STRATEGY– This uses the early minutes of an uptrend in placing trades. When it comes to stocks, it should reach a specific level of movement and volatility to prepare a breakout point of either support or resistance. This signifies viable time to trade.
- SWING TRADING BREAKDOWN STRATEGY- This swing trading strategy is the counterpart of a breakout, whereas the chart approaches lower prices. The same principle is observed, wherein movement and volatility serve as an indication.
- SWING HIGH SWING LOW TRADING STRATEGY– This exposes essential market information. A swing high is when a price moves to create a senior before two consecutive lower highs. More so, a swing low is when a price moves before the occurrence of two successive higher lows.
HOW TO USE SWING TRADING ON FOREX
Some steps need to be observed when one wants to use swing trading.
The first is to utilize a daily time frame. This is essential since it projects a wider view of the market status, price actions, and signals. Knowledge of how to use support and resistance is also crucial as these will provide viable trading opportunities. Inline, a trader needs to understand and assess the momentum. In doing so, these will help a trader determine its exit points.
WHAT TRADERS SHOULD USE SWING TRADING
Swing forex trading strategy fits those traders that don’t mind keeping trades for several days. This kind of setup is also ideal for those that demand less screen time, as this will only require 30-40 minutes of chart review and scanning. Also, as this is a slow-paced kind of trading, it suits traders who prefer a slower style as it gives more time for decision-making.
WHAT ARE THE RISKS AND DISADVANTAGES
Below are some of the swing strategy’s risks and setbacks.
- Markets move drastically overnight. If a specific move is against your position, you’ll be at the losing end. Even placing stop-loss does protect the position.
- When it comes to trading stocks, swing trading is not capable of providing the same amount of leverage that day trading does.
There are reasons why the swing trading strategy is considered as one of the most reliable trading styles. As secure as it is, it is considered to be one of the successful swing trading strategies out there under short term swing trading strategies. Such attestation is disclosed in any intraday swing trading strategies pdf you can find online.
Traders are allowed to trade in a less stressful environment while securing returns. Also, precision and accuracy in levels are a great advantage as resistance and support levels serve as a foundation. Inline, the daily time frame offers the most reliable signals. Another thing that secures considerable returns is through the use of a rational approach. This is important to determine possible exit points in advance.