Swing Trading – An Overlooked Powerful Strategy
Despite a lot of new trading strategies that have been invented in the forex trading world, swing trading is still have many users that implement it on regular basis to gain steady winning trades day after day; but apparently, this strategy is less popular among novice traders who aim for quick profits.
By definition, swing trading is buying or selling currencies near the end of an up or down price swing that caused by price volatility for a period. This position can last for a couple of days or just one day; depend on the market movement and the targeted profits.
With this method, there are a few important things to consider:
1. Support and Resistance
Don’t depend just on one chart to decide support and resistance level, instead, check a few different charts to make sure that you’ve had it right.
2. Using the Data
Even between swing traders, there are many methods used to define entry and exit point; these are some of them:
- Wait for the currency to turn away from support or resistance, define it as price momentum, and execute the trade.
- Identify a certain pivot point in the chart, mark it as “pivot line”, then if the price manage to break the line, execute buy/sell based on whether it is an uptrend or downtrend.
- Using Fibonacci extension tool or just look for nearby pivot point to look exit point from the market.
3. Indicators and their Functions
- Stochastic and RSI (Relative Strength Index) to identify momentum.
- Fibonacci, pivot points, and fractal measurements to identify entry point.
- MACD (Moving Average Converge Divergence) as additional tool for confirmation.
4. Taking Profit
How much profit to aim should be adjusted with the current market condition. If the market is trending or volatile, you need to get in, grab as much as you can get (within safe period), and get out quickly. This is important since as the market keeps moving, there is high chance that you’ll get a reversal.
On the other hand, if you’re executing your trade when the market is not really going anywhere, you can aim for longer term swing trade, such as 3-4 days. With this strategy, you can expect higher profit; just remember to put your stop loss and take profit accordingly.
Many novice traders choose short term strategies because they want easy and fast profits, but here’s the hard fact: it is really difficult to make numerous small trades and keep maintain good winning rate. Instead, if you’re just started trading forex, you should go with swing trading since it offer simple analysis and relatively safe way to earn steady profits.
About Author Learn more about a simple course that utilize swing trading method to aim huge profits in Forex Wealth Builder review. Claim your free forex 6 days trading lessons at forex trading course.
day trading strategy | admin | January 6, 2011 | 
Comments (0)
Don, market, novice traders, Overlooked, Powerful, price momentum, price volatility, relative strength index, resistance level, strategy, swing, swing traders, trading
