It seems that many if not all new forex traders are attracted to the excitement and the adrenalin rush of day trading the forex market. For these very reasons rather than cold hard logic. The simple fact is that most new day traders get chewed up in the random daily "noise" of the market. Swing A typical forex swing trade will last from around 2 trading days to 2 weeks.
Swing trading is actually one of the best trading strategies for new and experienced traders, as it is relatively simple to learn and offers excellent profit potential with relatively low risk. Many new traders are fed the myth that most professional traders day trade,when in reality most are taking longer term positions and hence use some form of swing trading strategy.
In the forex market especially swing trading opportunities present themselves regularly, providing loads of opportunities to take positions. Swing trading is also simpler than trend following, another longer term style of trading.
The Swing Trading Methodology
From a philosophical standpoint Swing Trading lies between day trading and trend following.
A Day trader typically holds trading positions from a few minutes, to a day whereas a trend following trader will might hold positions for a few weeks, months or even years. Swing trading methodologies vary but typically involve various forms of technical analysis to establish lines of support and resistance usually on new highs or new lows.
To establish an entry point in the market swing traders can use a number of technical indicators, typically swing traders are looking to buy into support, or sell into resistance. Support and resistance can be denoted by trend lines, Moving averages, Bollinger bands or historical highs and lows.
To establish a target or exit point for the trade a swing trader looks for the opposite signal, that is levels of support when you are in a sell trade and levels of resistance in a buy trade. A target is usually selected at the time the trade is placed. Because of the nature and duration of swing trading it is best suited to the set and forget style of trading. Therefore it works well for people who are unable to constantly be at their computer to monitor trades.
Swing Trading Forex