Forex Swing Trading Strategies
These are the 3 forex swing strategies we use in our firm everyday!
Whether you are a beginner or professional forex trader, you can use a swing trading strategy when trading. You need to understand how it works, among other forex swing trading strategies you can apply to make consistent profits.
Forex traders who rely on this trading strategy always take advantage of price swings in the market. They also have to consider other factors to make this type of trading method successful. For example, they have to consider the best indicators, the best time to use the swing strategy, and the risk management strategies to apply.
This post should help you understand all these factors, among the best swing trading forex strategies to use during forex trading.
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What is Swing Trading in Forex and What Does It Entail?
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.
What Is the Best Time Frame for Swing Trading?
The best time frame for swing trading forex strategy is up to you. When it comes to this strategy, you can trade depending on the market trends you have identified in the market. Although many traders are advised to enter the market when it opens, you can choose to enter a trade depending on what works best for you.
A wise trader will use technical indicators to identify forex swing trading signals and perform trades confidently.
Indicators will allow you to enter the market on time and exit before you lose all your gains. Below are some of the best indicators to use.
Pros and Cons of Swing Trading
- You do not need to spend much time following trends because the trades can last for weeks. This makes it suitable for forex traders with full-time jobs.
- Unlike day trading, swing trading has limited stress
- You can take advantage of technical support with swing trading. This is because the strategy relies on technical indicators for trades to happen.
- The strategy can be profitable if you know how to apply it. An average trader can earn 2% profit in each trade executed.
- You must have the ability to learn quickly to analyze charts accurately
- Overnight risks are there when it comes to swing trading. You cannot watch the charts 24/7, and you might miss the exit points at times.
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Best Forex Swing Trading Indicators
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;
Exponential Moving Average
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.
Relative Strength Index
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
- Correlation Matrix
- Parabolic Oscillator
Best Forex Swing Trading Strategies That Work
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;
Trend Trading in Forex
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
- Better profits
- It has a positive risk and reward ratio
- Market entry and exit is not critical
- Although precision is not crucial, it can sometimes be challenging to time the market
- You might get many false signals
Retracement Swing Trading
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
- There is a high success rate as you can get huge profits
- It can apply to bearish and bullish markets
- Requires a deeper understanding of how to apply it in trades
Breakout Forex Trading
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
- Positive risk vs. reward ratio
- There is a high potential for better profits
- Has compresses trading duration
- 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
- It is easy to use
- It can be very profitable if well applied
- Provides a clear picture of the current price movements
- You must understand other swing trading strategies
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How to Start Forex Swing Trading
If you want to start using swing trading, there are a few crucial steps you will need to know to begin successfully. They include;
- Open a trading account
- Choose your preferred currency pair
- Select the best swing trading strategy
- Follow the news to understand market trends
- Use technical indicators to find trading signals
- Use risk management strategies and get an app to manage your trades easily.
Frequently Asked Questions About Forex Swing Trading Strategies
We always identify common questions that our clients ask us about forex swing trading strategies. Here some of the most common ones:
What is the best swing trading strategy?
We think that Trend Trading is a very efficient way to start Swing Trading in Forex.
What is so difficult about swing trading?
There is nothing complicated about swing trading strategy. With practice, you can easily trade with it and make more profits.
Can I take my profits at any time when swing trading?
So long as you are done trading, you can take your profits.
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-Big profits 50-50 % profit split.
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