Swing Trading Strategies

Forex swing trading strategies are best suitable for traders who do not have a lot of time in their hand but has ample patience to keep the trades open overnight or even for a few days. Most people with demanding day jobs end up trading Forex with swing trading strategies as it gives them the flexibility trade the Forex market at their convenience.

Most swing traders use higher timeframe charts like 4-hour or even the Daily charts and hold their trades long enough to capture major price swings with profit targets of hundred to several hundred pips on each trade.

The main advantage of swing trading is the larger timeframe as it allows traders to incorporate fundamental analysis in their Forex trading strategies. With fundamental analysis, swing traders can easily identify the broader direction, then use technical analysis to pinpoint their entry and exit. Doing so reduces the risk of trading against the prevalent trend in the market, which helps increase the win rate of the Forex swing trading strategies.

Forex Swing Trading Strategies Can Incorporate Fundamental Analysis

we can see how a swing trader could have easily recognized that the GBP/USD will turn bearish after the U.S. non-farm employment figure came out at 175K against a forecast of 77K. Once the news was released, a swing trader would wait for a technical confirmation like the Stochastic sell signal in order to enter the market. As you can see, over the next few days, the GBP/USD fell hundreds of pips before the trend reversed.

Before you try to become a swing trader, keep in mind that there are inherent risks associated with Forex swing trading strategies as markets can suddenly change trend overnight when you will probably be away from the screen. Also, given the relatively larger timeframes, you need to use, swing trading involves larger risks per trade as you often need to set a stop-loss order above major support and resistance levels.

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