Swing trading (swing trading).

Determining the optimal duration of trades when trading Forex is one of the main tasks of a trader. This article will discuss a well-known strategy called swing trading, which is designed for medium-term trading.

Swing trading is a trading style that involves opening forex trades lasting from one to four days. Swing trading is based on the cyclical price fluctuations that occur over the course of a week.

In fact, this forex tactic is based on the theory that prices move in a certain cyclical pattern, sometimes turning in one direction, sometimes in the other. Anticipating such trend reversals is the basis for finding market entry points.

The swing trading strategy is quite complex and not suitable for every novice trader. However, according to experts, it allows for consistent profits in Forex trading, so the time spent learning it is well worth it.

There are a lot of tips and recommendations on how to use Swing trading, but most of them are quite confusing, so in this article I will try to explain the main points of this trading technique in simple terms.

Swing trading technique.

1. Trade volume is a crucial factor when trading this strategy. First, I'd like to point out that you won't be able to profit from high leverage, as the trade duration is one to four days. Your position must be able to withstand all short-term trend corrections. Calculating the optimal deposit size can be done using a simple formula: if Forex volatility is 100-150 pips per day, your position must be able to withstand a counter-trend movement of at least 50-70 pips. This will be the parameter for our stop-loss order.

2. Entry points – in our scenario, these are trend reversal points, when a new trend begins in the Forex market. Such a trend is usually triggered by strong news, so you'll need to use fundamental analysis. Moreover, the news must be sufficient to trigger a truly long-term trend.

A new trade should be opened if the counter-trend movement is greater than the standard correction size, and you are completely confident of a reversal.

3. Trade duration – one of the characteristics of swing trading is that a trade is held until it's profitable or until Friday arrives. This means you shouldn't rush to close profitable positions; it's better to lock in any profits already made by setting a trailing stop .

4. Trade closure – can be done using stops or manually. Market exits can be triggered by trend reversal data obtained by analyzing trends on shorter trading timeframes. Alternatively, the release of strong news that you believe will reverse the trend.

We will discuss swing trading strategy in more detail in the following articles.