Swing Trading Forex Strategies Swing trading has similarities to long-term trend following, but you are looking for much shorter market moves. A swing trade tends to last more than a day, but may run for anything up to a few weeks. The swing trader is essentially looking for multi-day chart patterns. Why?
To try and attain bigger price moves or swings than you would typically get from a day trade.
The time frames used on a chart by an FX swing trader might be as small as five minutes or as large as an hour. A swing trader may use a combination of fundamental and technical analysis to guide decisions. Whether there is a long-term trend or whether the market is largely range-bound doesn’t really matter. A Forex swing trader is not going to hold on to a position long enough for it to count significantly.
Volatility makes a difference though. Volatile markets tend to suit swing traders best.
The more volatile the market:
the greater the number of short-term price moves; and therefore
the greater the number of opportunities to place a swing trade.
Swing trading is well suited to the Forex market for a number of reasons.
Swing trading Forex pairs means:
you benefit from excellent liquidity; and
there is sufficient volatility to get interesting price moves; in
a relatively short time frame.
As noted, extremely short-term trades require constant monitoring. Long-term trades may not be active enough strategies for most people and require a lot of discipline. Swing trading tends to appeal to the mindset of a beginner, simply because it uses a more user-friendly time frame.
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