Forex traders around the world have adopted many different trading strategies with each plan possessing its pros and cons. In this guide, we will look into one such strategy known as Swing Trading.
Swing Trading is a style of trading adopted by many traders in an attempt to lock in profits on a stock or any financial instrument for a few days or several weeks as opposed to short-term strategies such as the 60-second trade strategy.
The trader, when using the Swing Trading strategy, maximizes their gains over several days while minimizing risks by placing small-valued trades on their positions and taking advantage of even the smallest market movement in the currencies’ exchange rates.
Right timing when placing trades is the most important aspect when using the Swing Trading strategy. To do so, Swing traders often use technical analysis tools to look for trading opportunities and may, at times, utilize fundamental analysis in addition to analyzing price trends and patterns.
In the following guide, we shall look into some aspects when utilizing Swing Trading, which can hopefully result in you finding your unique style to apply to the strategy. Remember, while it may take time to perfect Swing Trading, it may turn out to be a very profitable way to secure consistent profits in the Forex market in the long term.
- Budgeting Swing Trading
An exciting aspect when applying the Swing Trading Strategy in Forex is that you should only look towards making small profits through a series of trades over several days. This would mean that having a large trading budget would not be necessary to adopt this strategy. This kind of setup usually appeals to first-time traders and those who do not want to risk large amounts of cash.
As opposed to the Day Trading strategy, which is making profits using around 5 to 10% of the overall trading budget, Swing Trading is making much smaller gains for every trade placed which means that your total trading budget can be lower.
- Selecting Currency Pairs
Depending on the broker, you will be able to trade different types of currency pairs when utilizing the Swing Trading strategy.
Before to trading or opening any positions, you should allocate a day or a few hours to do your research and seek out information that will allow you, as a trader, to make appropriate and well-informed decisions when selecting a currency pair.
You must make sure that you are updated with financial news and other pieces of information released and know how these events will impact the currencies.
For example, if the news were to release official data regarding a particular county’s GDP, you should expect the exchange rate of the country’s currency to change while having a plan of action for it accordingly.
- Utilizing Signup Bonuses
A novice or inexperienced Forex traders often tend to be overwhelmed by the sheer amount of Forex trader bonuses offered when signing up for the Broker’s online platform and making an initial deposit into their trading account.
While these bonuses can give you a much larger trading budget, you will have to place a particular volume of trades in the Forex market with the bonus funds awarded before they can be considered real money funds.
Since Swing Trading requires placing a lot of trades over several days, bonuses may prove to be very useful in helping you secure a profit when trading. Besides, you could also get the best value for your trading by looking out for trading platforms that require traders only to place a small volume of trades to transform your bonus funds into real money.