Forex Swing Trading

Forex Swing Trading – The Ideal Market for Swing Traders

Swing trading stocks has been popular for years, but the rise of online trading has seen an ever increasing number of forex swing traders using the same methodology to make profits from global currency markets.

In fact, swing trading online in forex, provides the ideal market for the methodology of swing trading.

So why is forex the ideal market?

Firstly, let’s look at what swing trading is:

Swing trading is a method of trading that tries to identify intermediate swings in price, that can last from anywhere from a few days, to a few weeks.

The following conditions make FOREX swing trading the ideal investment market to trade in this manner.

1. Liquidity

Each day the global forex markets see trillions of dollars bought and sold, by millions of investors all around the world. This is a 24-hour market that never sleeps and is the world’s biggest investment marketplace.

The huge size of the markets allows traders to open and close swing trading positions at anytime of day or night to quickly lock in potential profits or just as importantly, minimize losses.

2. Volatility

By their very nature, currency markets are volatile.

They always tend to be on the move and a volatile moving market is exactly what you need for swing trading.

This volatility means that shorter term trading such as swing trading can be very profitable - due to the high number of potential opportunities that are regularly presented to forex traders.

3. Transaction costs

With the rise of swing trading online, the days of high transaction costs are long gone. Private swing traders can now get the low transaction costs that were once the preserve of large institutions, and high worth individuals.

This means you get to keep more of your profits.

If you swing trade regularly, you don’t want to see your profits diluted or losses made larger by the impact of transaction costs.

Today, many online forex brokers offer tight spreads of around 2 - 3 pips on major currencies, with no extra commission charges.

4. Trending nature

Currencies reflect the underlying heath of the countries economy they represent, as economic trends last for years, so to do currency trends.

While currencies exhibit great long-term trends, there are many profitable swing trading opportunities within them.

These swing trading opportunities last for a few days to a few weeks and they offer highly reliable patterns for the well informed swing trader.

Due to the above, FOREX swing trading is an easy psychology to learn

Many traders like to see action and lack patience.

FOREX swing trading offers them many opportunities due to the inherent volatility that the markets provide.

This means, they can enter a lot of low risk high reward trades regularly.

Furthermore, stops are obvious, tight and easy to place.

Swing trades tend to move quickly, keeping the trader interested, motivated and focused.

Any other swing trading tips?

Perhaps the other major point to keep in mind when FOREX swing trading is, to choose the currencies you trade carefully.

Look to trade the currencies that offer good volatility, trends and high liquidity, this means trading the majors:

US Dollar v British Pound, Euro, Japanese Yen and Swiss Franc.

These are the best – Don’t forget, that while the currency markets are the most liquid markets as a whole, there are some currencies that have far more volume than others and these by their nature, will have greater volatility.

Your forex trading strategy

Finally, when FOREX swing trading, you need a robust methodology to capture and make profits which includes:

A way of identifying support and resistance and some momentum indicators to time your trade.

You can buy a swing trading course or e-book, or develop your own FOREX swing trading system - the choice is yours.

If you buy a swing trading e-book or course, make sure you understand the methodology and it suits your trading personality.

You should also check the vendor’s real time track record to see proof that the methodology is soundly based.

You don’t have to buy a system from a vendor; you can easily build your own forex swing trading method from free sources on the net.

It doesn’t take long to do and you will soon be able to swing trade with confidence and aim for big long-term profit potential.