Before you start to trade on FX market, ask yourself one question – what kind of a trader are you?
Forex trading is based on personal presences.
There are those who like to enter a position and wait for long time to make a profit. On the other hand, certain traders prefer high-risk short-term trading strategies where they can make money within a day.
By answering this simple question you can learn more about yourself as an investor.
If you belong to the first group, then Forex swing trading is just the action you were looking for!
What is Forex swing trading?
As I already mentioned, swing trading is one of those long-term trades where you hold currency pairs for couple of days or more. It is ideal for investors who don’t have enough free time for day trading.
Swing traders will try to identify a downward or upward trend.
Given that price will be volatile and go from support to resistance and back, you need to find an ideal point of entry. This is known as “swing low”. These are the lowest levels of a swing (or can be highest, depending whether you wish to buy or sell currency pairs).
In other words, swing trader tries to find lowest points of an upward trend or vice versa.
Given that there will be several swings during a trend, you can even miss a swing and wait for the next one. Of course, with each new swing that you didn’t catch, your profits will be lower. This also means that you have several chances to sell your asset afterwards as long as this trend goes in the right direction.
Swing trading on Forex can only work if you’re certain that the trend will persist for a while and there are more swings ahead of you. If you opened a position during last swing and trend goes in an opposite direction afterwards, you will lose money.
Is swing trading the right thing for you?
If you don’t have enough time to read charts, check indicators and find patters each and every day, swing trading on Forex is the right thing for you.
However, that doesn’t mean that swing traders have the option of being lazy. Technical analysis is crucial for this strategy like any other; in fact, you might even argue that it is more important given that these investors perform fewer trades.
Then again it all depends on how you manage an account.
Some people love financial markets and start their day by looking at a chart. Swing traders are more patient, relaxed and can go several or more days without trading. If you’re one these individuals and are have confidence in your technical skills, then you might try this Forex trading strategy.
What are your views on Forex swing trading? Have you tried it out and were you successful?
Please share your thoughts in the comments below! For latest Forex news, make sure to visit our website regularly!