Forex Swing Trading

Forex swing trading is a trading strategy which tries to profit from price fluctuations in the forex market with a several day to several week range.

In fact, there are no fixed time periods that determine what is a swing trade.

However, if the trading (entry and exit for a particular trade) happens within a one day period for all of the trades, that is normally distinguished from swing trading as day trading.

Also, if bulk of the trades have an investment horizon of several weeks to months (and in cases, years), that is typically called forex trend trading.

Intraday, much of the forex movements are tied to particular events, and oftentimes, these events tie together over days and weeks to form a story that in turn forms a price trend that the swing trader tries to profit from.

For the more traded currencies of the bigger economic entities (including Euro for Eurozone and the US dollar for the United States), there are a lot of these events, and together, they oftentimes provide smooth trends in either way over a swing term traders trading horizon.

However, for the smaller currencies (Turkish Lira, for example), there is less data available, and individual events may contribute to the overall volatility much more than in the bigger currencies.

Forex Swing Trading Strategies

As is the case with trading systems in overall, there are two main approaches to swing trading. One uses past prices for technical analysis and trading signals, while another approach uses fundamental analysis, which includes economic data and other events related to the economies, for trading signals.

Some use a combination of the two.

For example, the basic signals may be based on technical analysis, but there are provisions for events that allow for trading to be done in a different manner from which the technical analysis signals would suggest.

There are ready-made swing trading systems on the market, some of which do not reveal the rules of the system to the buyer. Such systems are called black box forex trading systems, and you just get signals from them in relation to whether to go long or short of the currency pair, and whether to stay out of the market, and when to exit the trade.

However, most of the successful traders have a money management aspects to their trading, meaning they have a premade plan as to how much of their initial capital they risk with each trade, how much to risk overall, how to cut risk when losses occur, and other aspects that handle the portfolio's overall risk.

Also, another aspect of a typical successful swing trader in any market is that they test their strategies with past data and with demo accounts (if available), to find out the potential profitability of their strategy and weaknesses before committing any real money to the system.

Even then, there is no certainty that the trading strategy will be profitable in the future.


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