Swing trading (swing trading).

Determining the optimal duration of transactions when working on Forex is one of the main tasks of a trader; in this article we will talk about a fairly well-known strategy called swing trading, which is intended for medium-term trading.

Swing trading is a style of trading that involves opening Forex transactions lasting from one to four days. The swing is based on the use of cyclical price fluctuations within one week.

In fact, this Forex tactic is based on the theory that the price moves with a certain cyclicality, making turns in one direction or the other. It is the prediction of such trend reversals that serves as the basis for searching for entry points into the market.

The swing trading strategy is quite complex and is not suitable for every novice trader. But according to professionals, it is precisely this that allows you to make a stable profit when trading forex, so the time spent on studying it is compensated with maximum benefit.

There are a lot of tips and recommendations for implementing Swing trading, but most of them are quite confusing, so in this article I will try to talk about the main points of this trading technique in simple language.

Swing trading technique.

1. The volume of transactions is a rather important point when trading according to this scheme. First of all, I would like to immediately note that you will not be able to make money here by using large leverage, because the duration of the transaction is from one to four days. And it is required that your position withstand all short-term trend corrections. Calculation of the optimal deposit size can be carried out according to a simple scheme: if volatility on Forex is 100-150 points per day, then your position must withstand a movement against it of at least 50-70 points.

This will be the parameter of our stop loss order. 2. Entry points – in our version, these are the places of trend reversal, when a new trend begins in the Forex market.

This trend is usually caused by strong news, so you will have to use fundamental analysis. Moreover, the news should be such that it would cause a truly long-term trend. At the same time, we open a new transaction if the magnitude of the movement against the trend is greater than the standard correction size, and you are completely confident of a reversal.

3. Duration of transactions - one of the features of Swing trading is that the transaction is maintained until it makes a profit, or until Friday arrives. That is, you should not rush to close profitable positions; it is better to fix the profit you have already received by setting trailing stops .

4. Closing transactions - can be done in stops or manually; the basis for exiting the market can be data on a trend reversal, obtained by analyzing trends on lower trading time frames. Or the release of strong news, which, in your opinion, will change the direction of the trend to the opposite.

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