Every trader has his or her own unique trading styles and strategies. Traders use forex Swing Trading as it is one of the most common trading styles. Going to a war without a weapon would not accomplish you anything, let alone win the war. While war can’t be compared to trading, it is still a no-brainer to go to the trading floor without a weapon. And no, we are not talking about going to the trading floor with an actual weapon. We are talking about strategies. Forex trading strategies are your best friends. They are your crosshairs to help you hit your profit target in trading. And lucky for you, we are here to help you learn some strategies for forex swing trading. Firstly, there are different forex trading methods. Some forex traders even use technical analysis, such as moving averages, oscillators, and relative strength index.
If you are just starting out, we recommend learning first about the basics of forex trading and best currency pairs to choose. These would serve as your training wheels along the way. Getting back to your training, forex is a huge market, and there are various ways to squeeze a profit from it. And when the market is huge, then that means there are several strategies to apply on the battlefield. Each strategy has its own aspects that match certain kinds of situations. It is recommended to try them all on your own in accordance with your needs and preferences.
One trading style you can always try is forex swing trading. As the name implies, swing trading is an attempt to profit from the swings in the market. Forex swing trading strategies typically contain entry and exit techniques that only require checking the chart once or twice each day, or sometimes, every few hours. This is suitable for traders who have busy lives and full-time jobs. As the time frame you need is short, you won’t commit all your time to monitor the market. Yet, it is short enough to provide plenty of trading opportunities. Additionally, there is still a massive difference between forex swing trading and forex scalping. Bear in mind that there is no rule to stick to one strategy or style in trading. The world of finance is huge, and it is up to you how you utilize your knowledge to take over this world. And remember, there are always forex trading risks you need to consider before doing a move that could change your life forever. Now, forward we march to the strategies.
Forex Candlestick Trading
In this strategy, traders are taught to be extremely selective in picking trades and stay on the sidelines until everything looks perfect. Swing traders usually look for certain forex candlestick formations, in alignment with support and resistance. Usually, everyone is used to seeing the conventional line charts found in everyday life. The candlestick chart is a chart variant that has been used for about 300 years and shows more information than a common conventional line chart. It is possible to make money using candlestick trading. However, it is hard for most people to make more than just a little profit using this strategy. One reason is that there are only a few trades that look perfect. As a result, no one would take these trades. Psychology plays a huge role when a trader is sitting on the sidelines and sees a great move ready for an opportunity. This can make a trader itchy, having the urge to make a move on the next trade. And because traders combine support and resistance, trend, time of day or other factors, candlestick analysis on its own is useless.
Mean Reversion Trading
Historical data reveals that the best swing trading indicators tend to be mean reversion indicators. It is an alternative to looking for candlesticks patterns. Theoretically, mean reversion suggests that prices and returns eventually move back toward the mean or average. This mean or average can be the historical average of the price. This strategy involves the purchase or sale of forex pairs whose recent performances have greatly differed from their historical averages. Basically, a mean reversion trader looks for unsustainable trends or a price that has moved away significantly from its mean or average price. On the other hand, this is not suitable for beginners due to the emotional and psychological challenges it brings to a trader.
Bollinger Band Trading
Bollinger band is a famous mean-reversion indicator. Traders use this indicator to determine overbought and oversold levels, selling when a price touches the upper Bollinger Band and buying when it hits the lower Bollinger Band. Bollinger Band is an indicator created by John Bollinger. It was designed to measure a market’s volatility. The Bollinger band is made of 3 lines on a chart. These are the 2 standard deviations and a moving average. The moving average is a simple one, but it has been proven that using an exponential moving average is more useful for riding a trend. This is also called Middle Bollinger band, and the two standard deviations are above (Upper Bollinger band) and below (the Lower Bollinger band). These 2 standard deviations are a measure of volatility. A common strategy is to look for a break when the 2 standard deviations are moving away from each other. So, when the market is quiet, the upper and lower bands contract, and when the market is loud, the bands expand.
These strategies are just the tip of the iceberg. There are still thousands of strategies out there to use in forex swing trading. Even individuals like you develop strategies for themselves. Each of these strategies presented requires deeper analysis and application. You can still learn more about them and see if they fit your preferences. Don’t worry if you think that this is too much for you. Every trader started small. With determination and the hunger to learn, you’ll eventually become an experienced trader along the way.