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Is Forex Swing Trading Strategy Still EFFECTIVE In 2022?

Is Forex Swing Trading Strategy Still EFFECTIVE In 2022?

Is online trading a good source of earning? The answer is simple: trading is the best option in this growing world. Forex trading has already gathered a large market worldwide, and the world economy is affected by it very much.

You can create multiple profitable trades with a great strategy like the Forex swing trading strategy.

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But this also contains some risks. This market fluctuates more and more. So if you want a profitable experience, the one thing you need is to be strategic. To tread in the Forex field, there are so many strategies.

The one thing you need is to select your way to tread. Because if you are not interested in the strategy, you can't have a good experience with it. The other thing is you should choose a strategy that is not complicated.
 

If you are a risk-taker, you can select the most straightforward strategy in Forex trading, named Forex Swing Trading Strategy.

Key Takeaways

Forex swing trading techniques

  • A simple strategy identifies one's entry and exit points to provide a good trade.

  • People having other jobs can easily use this strategy.

  • Swing high and swing low are the key components.

  • People with a specific time can go swing trading because this system analyzes the market wisely.

  • You can trade in FX trading with a fantastic strategy by following easy steps.

Forex Swing Trading Strategy

What is swing trading?

What Is Swing Trading?

In Forex trading, wins or losses depend on how strategic you are. There are several strategies for trading Forex. Do you know exactly what swing trading is?

"Swing trading" is one of the best strategies for this. But I must clarify that swing trading is a style of trading rather than a strategy.
 

It's a reliable way that ensures gains within a comparatively concise time sequence.

This strategy follows a short/medium trading form. Here traders generally hold positions for several days or a few weeks. Profits are gained by identifying the 'swing highs' or 'swing lows.'
 

This strategy is popular among full-time job holders as they cannot monitor the charts all day long to trade.

They trade leisure time and spend several hours examining the market to make a trade. You can find many forex swing trading strategies online to gather some knowledge.
 

Swing trading is different from day trading. Here the main aim is to gain profit within a day. It's not for the long-term player.

People whose motive is to profit early can quickly go with swing trading. Swing traders first use technical analysis to find out their trading position.
 

Traders observe price trends and patterns through charts and decide to open the positions.

Those interested in swing trading should learn every single thing about Swing Trading. I hope this article will be beneficial for them.

How Does Swing Trading Work?

How Does Swing Trading Work?

Swing trading is the best option for the trader who has a full-time job or can't monitor charts all day long but has a particular time to analyze the market and remain up-to-date with the global economy.

In a swing trading strategy, currency pairs' price is up-to-date through technical analysis.
 

This trading aims to identify 'swings' with a medium-term trend and get in only when they point out a high probability of winning. Here traders buy a currency at the time of 'swing low' and then sell them when it's on 'swing high.'



In swing trading, trades last more than one day. For weather volatility, it required more considerable stop losses.

A Forex trader must have money management along with his trading plans. So, Is forex good for swing trading?
 

Since swing trading works best on higher time frames, open doors are restricted.

You may just get five to ten arrangements every month. Be that as it may, the return from everyone can be a lot more prominent than the individuals who day trade. Well, in the forex trading strategy, many trading styles are available to follow up for the forex traders.
 

Often you can observe trades are just against you during the holding period because of currency pairs' fluctuation rate. It fluctuates more for a short time, but you need not worry much about it.

Here the most important thing is to claim your desire one in time. If you cannot do so, it can affect your overall profits.

Why do forex traders use swing trading?

Forex trading captures the world's largest market. Here being strategic is much more critical. Swing trading strategy is one of them, and it's becoming popular daily. This system isn't concerned about the long-term value of a particular currency.

Its work process is finding profit through a high swing point. It can work all day, but you can select a specific period.
 

Here is an example from NZD/USD index:

 

NZD/USD index  

 

Source: FOREX.com

 

First, look at the orange horizontal line. It represents what is known as a level of crucial support. Between late May and the middle of June, we can see that it was tested on three separate occasions but held up.

However, after a recovery period, the New Zealand dollar plunged past the 0.649 level line and continued to fall.
 

At this point, the possibility of a swing trade loomed into play. By the time it reached 0.630, it was already trading at around 9% below in March. NZD had not been worth as little as 63 cents for four years. Ultimately you can ask:

Swing Trading Variations

How do you swing trade?

Swing traders frequently employ a variety of trading strategies.

The four most common are as follows: reversal, retracement (or pullback), breakouts, and breakdowns.

  • Trading in Reversals

Reversal trading is based on a shift in price momentum. A reversal is a shift in the price trend of an asset. For example, when an upward trend loses momentum, the price begins to fall. A positive or negative reversal can occur (or bullish or bearish).

  • Trading Retracement

Trading retracement (or pullback) involves looking for a price to reverse temporarily within a larger trend. Price temporarily retraces to a previous price point before moving in the same direction.

Reversals can be difficult to predict and distinguish from short-term pullbacks. A reversal is a trend change, whereas a pullback is a shorter-term "mini reversal" within an existing trend.
 

Consider a retracement (or pullback) as a "minor countertrend within a major trend."

Price moving in against the primary trend should be temporary and brief if it is a retracement.
 

Potential pullbacks always precede reversals. The difficulty is determining whether this is merely a pullback or an actual trend reversal.

  • Trading on the Breakout

Breakout trading is a strategy in which you enter a position on the early side of an UPTREND and wait for the price to "breakout." You enter a position when the price breaks through a critical level of RESISTANCE.

  • Breakout Strategy

The inverse of a breakout strategy is a breakdown strategy. You enter a position on the early side of a DOWNTREND, expecting the price to "breakdown" (also known as a downside breakout). You enter a position as soon as the price breaks through a critical SUPPORT level.

Are Swing traders more profitable?

So my answer will be: Swing traders expect to make a ton of little wins that amount to huge returns. For instance, different traders might stand by five months to acquire a 25% benefit, while swing traders might procure 5% weekly gains and surpass the other trader's benefits over the long haul.

Some Best Forex Swing Trading Strategies

Best Forex Swing Trading Strategies

Swing trading is prevalent in all FX trading strategies. People from all interests can be a part of this.

This source of trading strategy is relatively easy to operate and requires a small amount of time that one can choose a time slot per one's choice.
 

In Forex's swing trading strategy, there are several strategies to fulfill the demand of their consumers.

They are different, but the final product is the same. As per your type of trader, you can pick one and start your journey.
 

Your chosen strategy either follows trends or can trade for the counter-trend.

Here Are Some Best Forex Swing Trading Strategies:

Trend Trading

Trend trading is one of the best Forex swing trading strategies. People are willingly going through this and creating an enormous market hype.

In this type of trading, a clear price indication gives a specific lineup of prices when going up and down, and this process linearly follows a step-by-step formula.
 

This trading protocol also follows bullish trend lines and takes advantage. This strategy shows you where the market turned on, where it is in a low position, and where it is growing. It began from the lowest low to the highest value.

P.S: Trend trading is one of the safest swing forex strategies because it covers losses with outweighing profits.

Counter-Trend Trading

Counter-trend trading is an essential type of swing trading strategy. This protocol is tough to operate because this system needs much more attention.

If you somehow miss a signal, it can be a curse for your loss. So, you need to be more conscious about proper entry or exit time to make a remarkable profit.
 

This trading technique is the opposite of the trend trading strategy. This system or method shows breaking down, on the contrary, going up. Besides, position trading forex is one of the greatest forex swing trading strategies.

Moving Average Strategy

best swing trading strategy

The average time with all market moves is counted in the moving average strategy of forex swing trading.

To utilize this strategy, a trader should be skillful. The forex market provides a 24/5 trading service trade, and following a moving strategy, you need to select a time frame with your strategies.
 

Some periods of this moving average strategy are mentioned below:

  • 20/21 Period: This type is the most popular protocol used in the moving average strategy. Here price movement is more accurate than in others.
  • 50 Period: This time section is considered the industry standard and popular among them. This period is a medium for long or short-term trends.
  • 100 Period: This time slot is best for those who prefer weekly or monthly holding in a swing trading strategy.
  • 200/250 Period: This time is for the daily holders. The output here is much better.

Bollinger Band Strategy

People like the analytics world can margin Bollinger band strategy as a standard measurement deviation. Bollinger's band strategy uses three indicators and finds a specific turning point.

This three-point creates an average like a moving average strategy.
 

This strategy follows the same tricks to buy more at a low price and sell them at a high price. It's all about finding a suitable position between buying and selling. To earn a profit, all you need is to be strategic.

A Versatile Strategy

best swing trading strategy

One can use this strategy for educational purposes because it carries all tools used in some critical swing trading strategies. You can call it the mother of all strategies.

In summary, it's a combination of all swing trading strategies. It's the best option for the experiment to hold a specific strategy.
 

Learning the best swing trading strategies for beginners might help gather more knowledge about swing trading strategies.

Trading is an experience of winning or losing. Being strategic and concentrating is necessary for traders to succeed in this field. So, which strategy is best for swing trading?

Advantages and Disadvantages of Swing Trading Strategy

Advantages And Disadvantages Of Swing Trading Strategy

In the running situation of the trading market, swing trading became people's first choice. But still, there is some issue that creates difficulties for the users.

Here are some pros and cons of swing trading strategy: 

Advantages of Swing Trading Strategy: 

  • Swing trading requires a shorter time than day trading.

  • It provides the utmost short to medium-term profit potential.

  • Market swing is a significant portion here to get in and out in the trading.

  • It requires less analysis than any other trading strategy.

  • Swing trading allows a simplified trading protocol.

  • This strategy discloses traders' market risk.

  • It can assure you calm when trades move against you.

  • With fewer setups, you can start forex swing trading.

  • It can hold trades for several days.

These are the advantages of swing trading. There is nothing beyond a curse. So, swing trading also had some disadvantages too.

 

Disadvantages of Swing Trading Strategy

  • Trade positions are subject to overnight and weekend market risk.

  • Suddenly there may be a lot of damage to the market's reversal.

  • A trader will not be able to ride the trends.

  • There is an overnight risk.

  • Return is less compared to intraday trading.

  • It requires more mental control, calmness, and patience to operate.

Though swing trading has some disadvantages, it is more profitable and easy to use. So, with these advantages, a common question in everyone's mind is that…

 

How much do forex swing traders make?

Forex Swing Traders

For a day trader, it could be $1,000/day, and for a swing trader, it very well might be $5,000 or $12,000 or $60,000 each month. Every trader has an alternate level where they feel good.

Saying this doesn't imply that you can't continue to intensify your profits, yet as your pay develops, the inspiration to do it turns out to be less and less.

Is Swing Trading Beginner Friendly?

Is Swing Trading Beginner Friendly?

In a word, the swing trading is user-friendly. Its techniques are usually classified for beginners with an excellent trading experience.

Along with the beginner, people engaged with other jobs benefit from exploring the trading journey with swing trading.
 

You can operate your side business or semi-business outside fx trading if you are a swing trader. It keeps the market updated, which helps you most. After analyzing, you can quickly enter or take the proper exit.

But you can find all this if you give your time here. Overall this trading strategy is easy to learn. I wish all beginners good luck in having a positive experience.

Steps to Start Swing Trading

Steps To Start Swing Trading

Here, don't talk more. We are directly describing the steps to start a swing trading:

Step 1: The Trade Setup

First, you need to begin swing trading because it's like the conditions present in trade. It is helpful for the no-trend time. For example, if you're a trend-following trader, a trend must be present, and a trading plan should define your strategy.

 

Stock in Uptrend, Providing Possible Trade Setups for Trend Traders

Figure 1. Stock in Uptrend, Providing Possible Trade Setups for Trend Traders


This picture shows an example of this tread setup. Here prices are moving as a swing high and low, and the price range is like 200-days' average moving.

You can design your trade but remember that the condition must be favourable when you go with your strategy. So, which time frame is best for swing trading?
 

Normally, he utilizes a 1minute or 5 minutes time frame. Graduate to' Day Trading' when you are alright with holding trades over several days.

Step 2: The Trade Trigger

When you are prepared for trading, you still need an event to know the right time that triggers you to start your trade.

You can see the market is in an uptrend, but there is a time that ensures more opportunities for profitable tread.
 

Some traders like to buy on high, and others like it when the market pulls back. So chose won way to tread.

 

Possible Trade Triggers in Uptrending Stock

Figure 2: Possible Trade Triggers in Uptrending Stock


This figure shows three potential trade triggers. You can choose from here according to your trading strategy.

Step 3: The Stop Loss

Knowing the right time of entry and trading trigger isn't all about producing a perfect trade. It would be best to manage this trading risk with a stop-loss order.

For long transactions, a stop loss is generally placed slightly below a recent swing low and above a recent swing high for a short career. It supplies you with multiple ways to establish this stop-loss action.
 

The other method is the Average True Range (ATR) stop loss. That involves placing a stop-loss order at a certain distance from the entry price.

 

Long Trade Example with Stop Loss Placement

Figure 3. Long Trade Example with Stop Loss Placement

This picture shows you where your stop loss will be.

Step 4: The Price Target

Now you know that the conditions are in your favour to start a trade and where the entry point is, and where you need to stop.

So the next step is to earn profit potential. And as for the swing trading strategies, position trading forex is a great way to express your swing trading emotions.
 

The profit target is not based on some randomly chosen issue. All chart patterns provide targets that are based on size patterns.

The track's bottom channel, price target, shows you where the price is being reversed.
 

It would help establish your profit target after analyzing your trading way and strategy.

Step 5: The Reward-to-Risk

You should take your position where the profit margins are more extensive than 1.5 times the risk. For example, losing $100 if the price reaches your stop loss means you should be making $150 or more if the target price is reached.

In Picture 3, the risk is 210 pips, but the profit potential is 600. That's a reward-to-risk ratio of 2.86:1 (or 600/210).
 

Using a trailing stop loss isn't above all risk. All that you need is to manage the risk of your trading position.

You should avoid the trade if the profit margin is the same or low. Avoiding lousy trade is a wise decision for a good trader.
 

This five-step acts like a filter so that you can take trades that are related to your strategy. Only those trades provide good profit potential relative to the risk. Add in other steps to suit your trading style.

For example, swing traders may wish to avoid taking positions before significant economic numbers or releasing a company's earnings.
 

In this case, to take a trade, check the economic calendar and ensure no such events are scheduled for a while you're likely to be in the business. Swing trading time frames are virtual objects which can clarify a better view of your trading.

Following these easy steps can start one's forex swing trading journey quickly.

In the end, who is the best swing trader?
 

Mark Minervini.

Mark has obtained a lifetime of experience already for a long time. He has been a top swing trader for over 30+ years and was highlighted in a Market Wizards Book. Mark's evaluated returns are terrific, and he truly features what is conceivable with difficult work and discipline.

Is Swing Trading Right for You?

It's neither a good nor a wrong question here. I have been trading since 2005, and I find swing trading very lucrative. Remember, I have tried every type of trading strategy I can think of. Before 2010, my experimentation included anything from quick scalping strategies to trading Monday gap strategies. But the fact that swing trading Forex has worked for me does nothing to prevent you from getting better.

Finding an attractive style is more about personality than you might think. Often a designer will have difficulty expressing his or her personal style. The following points will assist you in deciding whether swing trading suits you best.

  • You might want to be a Swing trader if you want

Most forex swing trades can be completed in days or weeks. It means working nights or even weekends. Fortunately, there are several options for managing risks associated with longer holding periods.

A simple alternative to closing positions before Friday is to know that volatility could occur during government elections. I wanted more freedom with my money, Forex was why I began daily price action at the start of 2014 –. Overall, in forex market, it going to be hard if the person do not have certain amount of swing trading knowledge.

  • You might NOT want to be a Forex swing trader if you are a beginner

It's nothing quick or actionable in swing trades. This way the slower and better-trained traders gain advantages. If the holding period of your trade is longer than two days, you are doing something wrong.

You are not interested in making small sums of money for each position. In swing trade, your average earnings for a good trade may exceed 2%. Most day traders however make far lower amounts for profiting trades. The profits per execution are modest. It is hard to hold positions overnight in forex market. But for the forex traders, who have different trading style might help in this category.

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What indicators do professional traders use?

Conclusion

Forex swing trading techniques

I think this blog is helpful to you. Following the description may bring your comfort zone with this strategy.

You can also understand how to start your swing trading strategy, and it's all you should know before starting the journey. This protocol may change your trading experience.
 

As a swing trader, I suggest starting a profitable trading journey with a swing trading strategy might be helpful.

I have to stop here because it's already an extensive article. I hope all of you are having an incredible journey with the Forex swing trading strategy.

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