A Simple Swing Trading Strategy

A swing trader usually has his trades open from days to weeks. Keeping a position open for that long can be quite risky, especially in forex market where the market movement is really volatile, thus you'll need solid swing trading strategies. These strategies can be applied by all traders, but it’ll be easier if they match your trading style.

Pinpointing the Trend

The objective of swing trading is entering trades in the direction of a major trend. Thus, identifying the trend is an extremely essential initial step to master for a swing trader. The earlier you can identify the trend, the higher your chance to get massive profits.

However, you can't just concentrate on identifying treds because you have to keep an eye on whipsaws (a condition where a sharp movement followed by sharp reversal) too. It can be misleading and looked just like the market is trending, so make sure you can avoid it. There are several ways to identify trends:

- Using indicators: probably the most commonly used indicators are Moving Averages and Relative Strength Index. - Price Action Trend
- Pivot Point Trend
I would suggest using 15 minutes and 4 hours charts for this.

Look Forward To Pullback

After you determine the main trend, don’t rush and place your order. Look forward to some kind of pullback first to get a good entry point. By watching for a good price level before actually entering the market, you’ll get in at a great price and get better chance to score profitable trades.

Stop Loss Order

Any good trader applies strict risk management and stop loss is among it. For stop loss, simply use the latest swing high or swing low. Make sure you place your fund in a trusted broker that will not overlook your stop loss.

Closing the Position

The simple way is to aim for the same quantity of the pips you are risking. Example: if your stop loss is 20 pips below your entry point, then just set 20 pips above your entry point as the exit point (take profit order). Obviously, you can always aim higher than the amount of pips you risk; it’s completely up to you.

This is just one example as there are a lot of swing trading strategies around. Some of them may need you to learn more complex strategies or utilizing more sophisticated software; nevertheless, if you’re still learning, it is best to stick to one currency pair and get used to it. Furthermore, know the best time to trade for that specific currency pair.

You’ll find thousands of methods and strategies, but the point in swing trading strategies is just identifying a trend and follows it. As simple as that. The difference is just in how it is being applied, so you’ll want a strategy that matches your trading style.