4 Important Factors To Think About In Swing Trading
Even with so many alternative in forex trading systems, many professional traders are still utilizing swing trading to bring in steady profits from the foreign exchange market; on the contrary, novice traders who typically wished for instant profits aren't really interested in using this strategy.
By definition, swing trading is buying or selling currencies near the end of an up or down price swing that caused by price volatility for a period. This position can last for a couple of days or just one day; depend on the market movement and the targeted profits.
With this particular strategy, there are a few essential things to consider:
1. Support and Resistance Don't depend just on one chart to decide support and resistance level, instead, check a few different charts to make sure that you've had it right.
2. Using the Data It may be called 'swing trading', but that does not mean there is just one method to execute it; here are some method that have been used by lots of swing traders:
* Wait for the currency to turn away from support or resistance, define it as price momentum, and execute the trade.
* Identify a certain pivot point in the chart, mark it as "pivot line", then if the price manage to break the line, execute buy/sell based on whether it is an uptrend or downtrend.
* Using Fibonacci extension tool or simply search for nearby pivot point to look exit point from the market.
3. Methods and Indicators * Stochastic and RSI (Relative Strength Index) to identify momentum.
* Fibonacci, pivot points, and fractal measurements to spot entry point.
* MACD (Moving Average Converge Divergence) as additional tool for confirmation.
4. How much Profit? How much profit to aim should be adjusted with the current market condition. Should the market is trending or volatile, you'll want to get in, get as much as you can get (within safe period of time), and get out fast. This is very important since as the market keeps moving, there is high chance that you will get a reversal.
On the other hand, if you're executing your trade when the market is not really going anywhere, you can aim for longer term swing trade, such as 3-4 days. Of course, your target profit will be a lot bigger with this method.
Most new traders favor short term trading strategies because of their lust in quick profit or their low deposit, but in reality it's very difficult to make a lot of small trades throughout the day and keep winning. Rather, if you're just started trading foreign exchange, you ought to go with swing trading because it offer simple analysis and relatively safe approach to earn constant profits.
Article Source: FxTradingStock.com
About the Author
Find out more about a simple course that apply swing trading method to aim for huge profits on a review of Forex Wealth Builder. Additionally, think about using automated trading by check on a few proven and rewarding EA at top forex robot.
by: Matthew Johnson
Total views: 29
Word Count: 472
Date: Thu, 29 Jul 2010
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