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Swing Trading Strategy

Many Forex pros advise not to wait too long but this is exactly what the swing traders do. They take advantage of the swing of the currency price over a period of time. The swing trader may hold a currency for several days or even weeks depending on the trading market before he actually sells it. However, like any other trade the forex swing must be done with a proper care. This is a forex strategy for experienced and knowledgeable traders. The beginners of forex should get some experience before using this method.

The timings for entry, exit and control  are usually decided by an analysis of the market trends of the forex market and trading signals which may predict the future fluctuations of the currency. An understanding of these signals is essential for achieving success in the swing trading.

Many traders observe the political, economic and social situations for even a minor change. These evens greatly affect the value of the currency of the country where this event happened. However, it is true up to a certain extent. It is the expectations vs. sentiment. The expectations could be superseded by market sentiment. For example, if US GDP came out at 7.0% from 5% in the previous quarter markets may show no reaction. A possible reason is that sentiment could be dollar positive regardless of the actual figures.

Furthermore, “swingers” rarely place trades against the trend. Ideally the swing traders bet in the direction of the main trend.  As mentioned before, the trends can be identified by a variety of different tools such as price action  and indicators.

Once the main trend has been identified, the swing trader waits for some kind of pullback.  The traders want value. They are looking to enter a trade when they believe the market has dropped down to a level that they see as good value before entering. By trading pullbacks to an area that offers better value along the main trend they make their profit.

It may sound simple, but this is exactly what the major players and market movers do. Of course, they are better informed and have better financial resources than an average swing trader. However, many ordinary swing traders manage to stack the odds in their favor and earn more than other forex traders.

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