Foreign Exchange: Forex Swing Trading Explained

There are a number of different strategies for trading Forex currently available on the market and the thing to realize about a large number of these strategies is that as far as trading Forex goes, they can all work. This is the same for any other type of trading. If you are trading stocks, trading bonds, trading futures, trading indices or trading any other type of commodity that can be traded, there are a number of different strategies that will work for any given time period. What make the strategies work is the discipline of the trader involved and depending on the discipline of the trader, there are a number of strategies that might be ideal and a number that might be inappropriate.

Within the larger bubble of Forex trading , there are a number of sub categories of strategies that can be employed. Everything from day trading to trend trading is explored through Forex and one of those strategies that have become popular with a number of different people is the strategy of swing trading. Many people might not be familiar with what swing trading exactly is, so this article will discuss that in detail for these people.

Forex Swing Trading

Swing trading is one of the newer trading strategies that have become popularized for Forex, but as a trading type it has actually been around for a very long time. People have gotten interested in swing trading once it was demonstrated to them that it could be a very potent weapon in their Forex arsenal and since that time most people that have adopted swing trading as a strategy have never looked back.

But what exactly is Swing trading? Well, swing trading refers to a type of market analysis that is designed to specifically exploit one market condition that manifests itself every few days. There are many different trends of upwards and downwards movement in Forex and the main goal is to identify these early and hop on, but there is also another trend that refers to sideways movement. This is when the price appears to fluctuate between two upper and lower boundaries in periodic fashion. A person that is able to identify this sideways motion can enter a trade when one of the boundaries is reached in the opposite direction of the trend at the time the boundary was reached. In other words, the person that enters this trade is predicting a swing in momentum and that is where the term swing trading comes from.

Swing Trading Tip

If you are interested in Forex swing trading, then the best thing you can do to help yourself is to examine the market very closely. Swing trading can take place on any level that is possible in terms of time frames but a good place to start would be in looking at the daily bar charts for the Forex currency pair you are interested in. Make sure that your sideways top and bottom boundaries are well defined when you enter a trade because it could be the difference between a successful and failed trade.