Swing trading in forex is simple to do and it’s a great way for novice traders to start trading - it’s also fun and a great way to pile up big profits. Let’s look at swing trading in forex and 4 simple steps to help you succeed.
Here are the 4 steps you need to make swing trading a profitable part of your overall forex trading strategy.
1. Valid Support and Resistance
You need to spot it and use it to spot trades.
Generally look for at least 3 tests of support or resistance.
Tests that take place in time frames that are wide apart, tend to be more valid and while 3 is a minimum of tests, the more tests there are the better.
Once you have spotted tests of support and resistance, then its time to execute your trading signal.
2. Confirm
The key with any form of trading and swing trading in forex is no different, is not to simply trade into support and resistance - this wont work.
Why?
Because - you are simply hoping or guessing the levels will hold.
Hoping and guessing, are not a good way to seek profits in any venture and swing trading in forex is no different.
You need to confirm that the levels are going to hold and this means using momentum oscillators.
These can be used to measure shifts in momentum of price.
For example, if prices move towards resistance and turn away with price momentum on your side, you have the opportunity to execute your trading signal in line with this shift and have the odds on your side.
You’re not predicting or hoping – you are seeing the reality of price change on your forex charts and acting on the reality.
Confirming a turn is an essential part of swing trading success.
So what indicators should you use for indicating momentum shifts?
A Great couple of indicators to start with are:
The stochastic and the Relative Strength Index (RSI) There not the only ones but a great place to start – so look them up.
3. Stop and Target
Your stop should be behind the level of support or resistance and you should have a profit target.
When you are swing trading in forex you are seeking smaller FX profits and they can disappear quickly, so have a target to take profits earlier than most people i.e before the text of the next level.
When you hit your target bank it.
The closer the trade comes to the next level, the more the odds of recoil against you are - so bank early.
4. Shop Rates
If you are long term forex trend following the cost of business is low as you are trading infrequently and have bigger profits per trade.
With swing trading in forex, you are trading more often and pips mount up, so shop around and look for 2 pips on the majors.
Another important point to keep in mind when swing trading is:
You want liquid markets so stock with the major currencies such euro, yen and pound, although you can trade the Australian and Canadian dollar as well.
The Best Form Of Trading For Novices
Swing trading is great for novices, as it requires less patience and discipline than long term trend following.
Profits and losses come quickly and you don’t need the patience to sit on trends for weeks or months on end.
Swing trading in forex can be done using just basic support, resistance a few momentum indicators.
This simple method can lead you to currency trading success.
While the above sounds a simple system, keep in mind simple methods work best and are far more effective than complicated forex trading systems, as they are more robust and have less elements to break.
Forex Swing trading is easy and quick to learn, is fun and exciting and best of all can make you big forex profits. So if you are trading forex, consider swing trading and you maybe glad you did.
Article Source: http://EzineArticles.com/?expert=Kelly_Price
http://EzineArticles.com/?Swing-Trading-In-Forex---4-Steps-To-Swing-Trading-Success&id=771958
0 comments