What Is Forex Swing Trading & How to Find Good Setups

By ForexTradinginZA

The swing trading strategy is often sought out by the beginners when trading Forex, as it is easy to learn the ropes with. The professional Forex traders also seem to trust swing trading and does it in combination with day trading or other such Forex trading strategies. The swing trader attempts to understand the wave-like patterns in the trading charts of stocks, commodities, indices and currency pairs. Swing trading strategy is prevalent in stock trading where the traders seek to gain any financial instrument or stock within an overnight hold to several weeks. In case of Forex trading, the swing can be observed usually on a trading week from Monday morning to Friday night.

Swing Trading Strategy in Forex

The market price of a currency pair general shows the relation between supply and demand at a time. The price action of an asset in case of Forex trading shows the uptrends, downtrends and range contraction or consolidation. The pattern can be observed in the form of a released spring on the chart. The uptrend can be determined when the consecutive High is higher than its previous High, and the consecutive Low is placed higher than its previous Low. A downtrend can be observed when the situation is the opposite.

The swing trader has to understand the pattern early on and Open the position as soon as possible. Several Forex swing traderstend to hold onto their positions through multiple swings if the underlying trend remains strong. The swing pattern will fall apart if the underlying trend breaks. Swing trading in Forex cannot be specifically said to be short-term trading strategy or long-term trading. This type of trading usually occurs on the medium term timeframe. The beginners may find the swing trading strategy to be quite challenging and they do not need to bear the mental stress usually observed in day trading. The swing trading strategy can also be strengthened with the help of other Forex trading strategies.

When to Do Swing Trading in Forex?

The Forex market generally indicates a pattern when depicted on a chart and the charts are a must when it comes to technical analysis. When considering Forex swing trading, one should check whether the swing is in the same direction as the market. The beginner should also look at other currencies that are showing similar characteristics to the one they want to trade. The next thing is to understand the current trend and see whether it is strengthening or weakening.

A swing trader needs to be a little aggressive as the trading type demands to be spotted immediately for profits. However, the trader should also reduce exposure during the bad times rather than being aggressive. Traders who want to trade the counter- trend (downtrend, bearish market) can also use swing trading strategy.

Day trading strategy, RSI trading strategy, stochastics trading strategy, and big three trading strategy are just s ome ways to move forward as a Forex investor/trader. To find a suitable broker to learn about the different strategies when trading Forex, visit http://www.tradeforexinsa.co.za/?utm_source=rss&utm_medium=rss

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