Learning to use the swing trading strategy

by Susan Paige on February 2, 2020 · 0 comments

The swing trading method might be the most complicated and boring strategy in the Forex market. To trade Forex by using the swing trading strategy, you should have a strong technical and fundamental knowledge. The naïve traders in Hong Kong can’t find the endpoint of the market retracement. They are always predicting the market trend based on complicated assumptions and losing money. On the contrary, trained professionals at Saxo are using their in-depth knowledge of trading and executing random trades to earn more money.

Today, we are going to learn about the best practice to learn the art of swing trading method. Before you start learning this strategy, let’s discuss the pivot point to make things easier.

Pivot points in Forex

Pivot points are the critical price reversal point. You can consider them as the support and resistance level also. Most of the time, the market tends to end its correction at the critical pivot point. The position and swing traders use these pivot points to find the potential buying and selling zone.

So, how do find these pivot points? Though there are many ways to find the pivot points, the professional traders love to use the simple approach. Instead of using a super complicated trading method, the pro traders use the cluster of candles to find the best trading zones. Open a practice trading account to learn about the pivot points so that you can execute the best trades without having trouble.

Developing a swing trading strategy

The pro traders in the options trading industry use the swing trading method to find the endpoint of the market retracement. This strategy is often used to find the key reversal zone. To execute trades using the swing trading method, you need to learn about the Fibonacci trading strategy. Though the Fibonacci retracement levels provide strong support and resistance, it often breaches. To find the bullish retracement level, you should focus draw the retracement level from low to high. On the contrary, draw the bearish retracement level from the swing high to low. And execute the trades at the 5-% and 61.8% retracement levels only. More information is available on this website.

Use of the wide stop loss

The swing traders always have to use a wide stop loss at trading. Most of the time, it becomes impossible for the naïve traders to uses the swing trading method since they are undercapitalized. Even if you manage to scale down the lot size, chances are high you will not have enough patience to stick to the trade. Try to develop your patience level and start using the wide stops. However, you can reduce the risk exposure to a great extent by using the candlestick pattern trading strategy. Let’s say, you are trying to short the pair on a major swing. You will set the stop loss above the last high. Instead of doing that, you can look for the bearish price action signals and execute short orders with a very tight stop.

The risk to reward ratio

A swing trading strategy may be the most efficient way to make a profit in the Forex market. Sadly the naïve traders fail to make a profit since they always take high risk. Think about the risk to reward ratio when you execute the new orders by using the swing trading method. Forget the fact, you are dealing with a higher time frame. Think trading as your business and try to follow the conservative method. Focus on the long term goals and try to improve your skills by using some basic techniques. For instance, you can trade with the major trend while using the swing trading method. And never execute any trade unless you have a 1:5 risk to reward ratio. A higher risk to reward ratio gives you an added advantage to deal with the losing orders. Eventually, this helps you to earn more money even after having a low win rate.

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