Forex swing trading involves keeping a position open for weeks at a time. In a typical swing, currency pairs move five to ten percent. However, if you are trading with 50:1 leverage, a mere 2% change can wipe out your position. That is why a forex swing trading strategy requires a good understanding of fundamentals and market trends.
The key to swing trading is to buy at the bottom of a trend and sell at the top. This means that even if you miss the start of a trend, you can still get in and exit the market at the right time. You can do this by waiting for price swing points, which can be found at resistance and support levels.
Another forex swing trading strategy is day trading. This strategy requires you to buy and sell currencies at various points throughout the day. This strategy is useful if you work full time and do not have the time to monitor the market all day. However, if you’re not willing to spend all day at your computer, you may want to use a medium-term strategy, which is more time-saving.
The main objective of swing trading is to profit from price fluctuations. A swing trader will hold a position for several days or weeks. The trader will analyze the daily and four-hour charts in order to find a trading opportunity. Alternatively, they will let scenarios develop on their own. Swing trading can be used on all CFD instruments.
Traders who choose to use forex swing trading strategies are those who are prepared to learn the market and develop a specific skill set. It is not a simple process, and a lot of practice is required before you can start profiting. Learning to swing trade involves learning how to apply fundamental and technical analysis, as well as incorporating risk management and position scaling into your trading plan.