Trading and investing are no longer secrets for anyone. In fact, more and more people turn to this activity, regardless if we’re talking about crypto trading or forex trading. This time, we will be detailing a trading strategy called swing trading forex which has become a lot more popular than ever before.
In short, swing trading is a trading style that helps the trader have short- and medium-term gains over a certain period of time. Usually, this period is between a few days and a few weeks. Whenever they want to find good trading opportunities, swing traders turn to technical analysis. Some of them also use fundamental analysis if they want to search for patterns and analyze price trends. In this article, we will go into detail about swing trading forex and how it can be used.
More about swing trading forex
To put it simply, performing swing trading means holding a position long or short for more than one single session. This also means that a trader shouldn’t hold it for more than two months, maximum. Remember that this is a general view of swing trading and that there are people who hold a position for longer than two months.
When it comes to the actual goal of swing trading, traders usually aim to get a part of a potential price movement. This style works with both volatile or more stable stocks, depending on what each trader prefers. As a process, swing trading involves seeing where the price of an asset will move next, entering a position, and then getting a good part of the profit in case the move gives results.
Swing trading forex is definitely one of the most used trading strategies. Swing traders are always looking to capture some profit and then move on to the next good opportunity. Most people analyze an asset’s chart to see where it’s best to enter and place a stop loss. The next move is to anticipate where they can get out so that they also make a profit.
Swing trading forex pros and cons
There are a lot of benefits of swing trading. Some of those include the fact that it takes a lot less time than day trading. This makes it the perfect style for people who don’t have much time on their hands. This strategy is also able to catch the bulk of market swings so that it increases the potential for short-term profits. Also, this is a fairly simple strategy to use because you can only rely on technical analysis.
On the other hand, some disadvantages of swing trading include the risk of some market reversals that can make you lose money. There’s also a degree of a weekend and overnight market risk in all trade positions. Finally, swing traders have the tendency to focus on short-term market moves and sometimes they miss good opportunities in longer-term trends.
All in all, as you can see, there are advantages and disadvantages when it comes to swing trading forex. However, practice and skill development are two very important factors that you need to take into consideration if you want to start swing trading. There is always a risk whenever you are trading but you can always make an effort to minimize that risk through study.