Forex Swing Trading Strategies

What is the swing trading forex strategy? This trading strategy involves selecting the entry, and exit position that appears before or after the market suddenly takes a turn.

Traders have to spot a possible trend and hold the position for days or several weeks.

Traders can utilize the best indicators to enter or exit the market precisely. It helps them identify different opportunities and also makes trading a lot easier.

This trading method is between day trading and position trading. It is suitable for traders working full-time but can spare some time to follow the market trends to stay updated.

Like any other forex trading strategy, it also uses technical and fundaments analysis to determine if forex pairs will go up or down.

Forex trading is not all about being patient and determined. You also have to be smart to boost your chances of success. Some common forex swing trading indicators professional traders use are;

An Exponential Moving Average is a trading strategy or indicator that falls under the moving averages. The indicator mainly emphasizes more on the recent data, allowing traders to have insight into new information. It is mostly used to determine future trends, and when combined with other indicators, it can provide accurate data.

This is one of the best indicators you can use with a swing trading strategy. It is easy to read the charts as it uses figures between zero to 100. It helps traders identify oversold and overbought markets. This, in turn, allows traders to know when to open trading positions.

Bollinger Bands is a popular indicator that gives a range of the prices in the market. It primarily reflects the market’s volatility, which can significantly help in swing trading. This is because traders can quickly determine how the market will move before opening a position.

Other Indicators include;

• Stochastic Oscillator
• MACD
• Correlation Matrix
• Parabolic Oscillator

When choosing swing trading strategies, it comes down to the type of forex trader you are.

There are a few best ones that many swing traders use, but no matter what you choose, they all follow the market trend or go against the trends. Here are some you can use;

This is the best swing trading forex strategy as it applies to both the upper and downer market trends. With the strategy, forex traders can see whether prices are going down or up. Apart from that, trend trading uses bullish trend lines. This means that traders can easily spot perfect points where the market tunes from a low point and starts in an upward trend.

Pros and Cons of Trend Trading

Pros:

• Better profits
• It has a positive risk and reward ratio
• Market entry and exit is not critical

Cons:

• Although precision is not crucial, it can sometimes be challenging to time the market
• You might get many false signals

Retracement trading is all about reversing prices temporarily with larger trends in the market. When this happens, prices will retrace temporarily to an earlier point and then move in the same direction. With this swing trading strategy, you have to know if it is an actual reversal trade or a pullback since many reversals usually begin with pullbacks.

Pros and Cons of Retracement Trading

Pros:

• There is a high success rate as you can get huge profits
• It can apply to bearish and bullish markets

Cons:

• Requires a deeper understanding of how to apply it in trades

This is yet another powerful method you can use with a swing trading strategy. It involves taking a position as early as the uptrend begins and finding breakout positions. As soon as the price breaks, you can open a trading position.

Pros and Cons of Breakout Trading

Pros:

• Positive risk vs. reward ratio
• There is a high potential for better profits
• Has compresses trading duration

Cons:

• It is difficult to time the market
• It might provide false indicators

This strategy takes advantage of other trading strategies to determine price movements. This allows traders to know when the market is highly volatile. It is a beginner-friendly strategy but requires a deeper dive compared to other swing trading methods. It simply requires you to combine different swing trading strategies and skills to approach the market confidently.

Pros and Cons of Versatile strategy

Pros:

• It is easy to use
• It can be very profitable if well applied
• Provides a clear picture of the current price movements

Cons:

• You must understand other swing trading strategies

If you want to start using swing trading, there are a few crucial steps you will need to know to begin successfully. They include;

1. Open a trading account
2. Choose your preferred currency pair
3. Select the best swing trading strategy
4. Follow the news to understand market trends
5. Use technical indicators to find trading signals
6. Use risk management strategies and get an app to manage your trades easily.

A.Karim Yousfi is a experienced trader and analyst. He is managing a team of 5.000 traders at Audacity Capital London Trading Floor.