Swing Trading – The Simple Way

by James on January 11, 2017 · 2 comments


If you are a Forex Trader who needs to be away from his charts during the course of the day but you can spend some time daily monitoring the markets, swing trading might be for you. Swing trading works well for those traders in school or with full time jobs, allowing for them to study the market but not watch it minute to minute.

One of the most successful swing trading strategies is called channel trading and it is based on price channels.  A price channel is when you can see a trend between two or more swing lows and swing highs.  Swing trading is when you find a medium term trend and are patient enough to hold onto your trade for several days at a time.  If a trader is able to identify a defined price channel, they can have multiple opportunities for success within a short period of time.

This type of trading requires more patience, larger stop losses and trust in your system in order for it to work.  Swing trading means that because you are holding the trades for longer than usual, there will probably be several ups and downs during the time period in which you are operating.  You have to be confident enough in this strategy to not jump out during a small down trend.

For swing trading, you must adapt your money management plan to include larger stop losses because of the high volatility during your trading period. Swing trading requires you to make fewer trades with a longer duration than traditional Forex trading and your money management plan has to reflect that if this is a strategy you want to adopt.

Swing trading is the most simple, most likely to be successful method of trading for the small time trader.  Most Forex trades are done by bigger outfits like banks or hedge funds.  If you are what is called a “retail trader”, like a retail customer, you must use a different strategy than those trading (or purchasing) wholesale.  The bigger firms can operate without depending on small stop losses, and they profit off your everyday smaller trades.

There is a large difference between what is called day trading, trading that is usually all done within one day, and position trading which means you buy for the long term investment with the hope that over a long period of time your investment will rise.  Somewhere in between is swing trading.  Some call it the happy medium or sweet spot.

The directional moves in the market that you are looking for in swing trading typically last between 2 and 6 days.  This type of trading allows the retail trader to take advantage of the fluctuations that are caused by the institutional traders who trade quickly but do not move giant amounts in and out of the market.

Experts in swing trading learn to anticipate the next swing, and buy on the low end of the dip when the overall market is rising and selling at the high end of when the market is falling.

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{ 2 comments… read them below or add one }

1 Intelligent Trend Follower January 12, 2017 at 9:21 pm

Awesome article! I have been swing trading for years and it’s made a great difference for my financial bottom line. I know a lot of financial advisors and investment managers don’t advocate for trying to time the market, but I think if you manage risk carefully it can be successful.

2 swingalpha January 17, 2017 at 5:32 am

amazing guide, thanks for sharing

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