Guide on Forex swing trading strategy for beginners

Most of us have this common mindset which says that the more hours you work, the more money you can harvest. Many traders follow this mindset in the financial market that eventually results in a whole lot of stress, and sometimes it goes to the destruction of the trading account. It results in giving up on trading dreams. But successful trading does not have to look like this.

The fact of the market is that you can go far once you know what to do and what to look for. It will eventually mitigate the time that you spend at trading. Hence the article focuses on the important concept of forex swing trading strategy. It will help you to understand how to trade with less stress, less time and be more profitable.

What is Forex Swing Trading Strategy?

Forex swing trading strategy is an unpredictable activity in foreign exchange markets. Here the trade benefits are held for uniting one or several days in an attempt to gain profit from price fluctuation. A swing trading position is usually held longer than a single day trading position. But kept shorter than purchase and hold investment strategies which continue for months or even years. Profits can be sought by either purchasing an asset or simple selling. Momentum signals to be used by financial analysts in their selling and buying recommendations which can be put in swing trading.

Using a set of mathematically based objective tools for selling and purchasing is a random style for swing traders to eliminate labor-intensive analysis and the emotional aspects of swing trading. For creating a trading system, one can make use of trading paraments such as technical study or fundamental study to give sell and buy signals.

Easy trading based on simple rules includes Alexander Elder's strategy. It notices the fluctuation of a tool price trend using three different moving averages of closing prices. The instrument is only invested Long when the three averages combine in an uphill direction. Similarly, it is invested shortly when the three averages are running downhill. Trading systems may lose their profit potential when they obtain enough of a mass following to reduce their effectiveness. Now it is an arms race. Every person is building more knowledgeable algorithms, and when more competition starts, profits are going to be smaller. Andrew Lo (Director of the famous Laboratory For Financial Engineering, Massachusetts), says this line.

Analyzing when to enter and when to exit a trade is the main challenge for all swing trading games of the plan. However, swing investors do not need perfect timing to purchase at the below level and sell at the very peak of price moment to harvest a profit. Small regular earnings that involve continued and strict money investment management parameters can compound returns over time. It is generally known that mathematical models and algorithms do not work for every instrument and in every market situation.

Steps for swing trading

The six simple steps to carry out swing trading are as follows:

Step 1: Analyze the market on a daily time frame

Step 2: Draw primary support and resistance levels

• Horizontal support and resistance
• Trend lines

Step 3: Evaluate Momentum

There are three basic types of market momentum:

1. Uptrend: higher lows and higher highs
2. Downtrend: lower lows and lower highs
3. Range: Sideways movement

Step 4: Monitor for Price Action Signals

Step 5: Identify exit points or signals

Step 6: Calculate the level of risk and try to manage it

Is forex swing trading strategy right for you?

There is no exact answer to this question. Many traders who are practicing forex swing trading strategy for long find it most profitable. But remember it does not mean that if the same strategy is working for them, then it must work in your case too. Trading conditions of every trader are different.

Finding a probable technique has more to do with your preferences and personality rather than following ideas and explanation of others. You are bound to struggle if you opt for the strategy which does not suit your style.

The primary points below will help you determine if forex swing trading is right for you or not.

You might want to follow the forex swing trading strategy:

• If you are the one who does not mind holding various trade for several days

• If you require more freedom and time for your trade
• If you work in a private organization or have a full-time job
• If you do not mind taking fewer traders and making more on each trade
• If you are the one searching for a slower-paced technique of trading

You cannot follow the forex swing trading strategy:

• If you are the one searching for an action-packed method of trading
• If you are the one who does not mind obtaining a small amount on every trade position
• If you do not support an idea of holding trade positions overnight
• You do not have patience and want to know if you are right or wrong instantly
• If you feel anxious when trades move against you

The Bottom Line

You don't have to be scrolling to your screens all day to make a living from the Forex markets. If you find it hard to take out time to invest in the markets due to other commitments, then this Forex Swing Trading Strategy is ideal for you. Once you have learned how to trade using this approach, it only takes 10 minutes a day finding the setups.

If you are searching for a legitimate financial service provider offering forex trading, then you can go with T1markets. The CySEC (Cyprus Securities and Exchange Commission) regulates it. The minimum charges to open a trade with the broker is $250.