Swing traders

Swing traders in forex hold trades for more than one day to a few weeks.

Swing traders in forex are able to identify viable swings within a trend and take positions only when they see a high possibility of winning.

When you are a busy kind of person but still want to trade, swing trading allows you to trade even with your busy schedule.

With swing trading, you don’t have to sit in front of the charts all day.

Since you hold trades for more than one day, certainly you will have to focus on large time frames for your trades. 

How does swing trading work

Swing traders in forex can decide to trade following the trend or trade counter to the trend.

This means, when in an uptrend, you  buy at a swing low and sell at a swing high. Do the same applies when trading a downtrend.

However, this is only possible if you are able to identify the levels of support and resistance.

Trend followers concentrate on support and resistance breakouts while the counter trend traders look for retracements/bounces on the levels of support and resistance.

Let’s take a look at an example CHF/JPY, 4-Hour chart below.

From our chart above,

Buy Trades

Buy 1 and Buy 2 confirmations is the Bullish engulfing pattern on support level. The same goes for Buy 3 at the retest of lows.

Stop loss (SL) on the buy trades is just below the lowest low of the trigger candlestick and immediate target is the previous highs.

Sell Trades

Sell 1 confirmation signal is the bearish engulfing on the previous high resistance. The Stop Loss is just above the engulfing pattern and target is the previous lows support

Sell 2 &3 confirmation signal is the hanging man & shooting star candlestick patterns respectively.

The Stop Loss is just above the confirmation patterns and profit targets are the previous low zone

As you swing low and high, your stops should be big enough to allow the trades to breath and to cater for market volatility. This can also depend on how long you want to hold the trade.

Characteristics of swing traders in forex.

  • Swing traders open their trades and monitor them  mostly at night.
  • Take a few trades  and hold them for more than one day and sometimes to a few weeks.
  • Mostly they don’t have time to commit to charts every day, are known to have busy schedules.
  • Swing traders hold their trade positions varying from short time frame to larger time frames.
  • The swing traders are patient traders enough to wait to harvest profits after a few weeks.
  • As a swing trader, you must have a big amount of capital on your accounts to sustain trades for long.
  • Mainly use limited leverage for trading and hold trades using a small size.
  • Swing traders Commonly depend more on technical analysis rather than fundamentals to analyse the market.
  • It is un avoidable to use large stop losses.
  • They don’t panic when a trade starts to go a few pips against their trend prediction.

Swing traders take a few trades and this helps them to avoid over trading.

Over trading is one of the reasons why traders’ accounts blow.

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