Top 8 Forex Trading Strategies and their Pros and Cons

Top 8 Forex Trading Strategies and their Pros and Cons

swing trading forex strategies

The secret is to apply them on big enough time frames. Therefore, swing trading strategies that work may not fit an impatient trader. Even if their result is proven. Swing traders.

Since swing trading can be undertaken by anyone with some investment capital and does not require full-time attention, it is a viable option for traders who want to keep their full-time jobs, but also dabble in the markets. Swing traders should also be able to apply a combination of fundamental and technical analysis, rather than technical analysis alone. Swing trading is based on identifying swings in stocks, commodities, and currencies that take place over a period of days.

Forex Swing Trading Strategies

Namely, you curtail your exposure to the market. It gets better too, because you are only looking for very small price movements, and opportunities for trading are plentiful.

Time Frame of Traders

Many trade setups will only produce trades that are good for 2x or 3x risk, but sometimes setups provide much more favorable risk/reward ratios than that. When those opportunities occur, take advantage. A mini account makes you trade in 0.1 lots, where each pip is worth a $1. A standard account requires trading full lots, where each pip is worth $10.

The take home message here is, swing trading will help you avoid over-trading, and over-trading is the biggest reason why people lose their money trading. The big players in the market, like banks, hedge funds, etc. know where smaller how to choose forex broker retail traders place their orders and what they typically ‘do’ in the market (buy breakouts, day-trade, etc.). They know all the small-timer strategies and believe it or not, they enjoy taking your money every day in the market.

The trades can be held for days and even weeks allowing the price momentum to run its course. Learn to trade against the trend. That’s a skill many swing traders take time to get used to. Many traders think that swing trading is all about trading with the trend, this is not the case.

Here is another strategy called a weekly trading strategy that will keep you sane. is another forex trading strategy which can also be easily adapted by a swing trader as a swing trading strategy.

Now you’ll be trading like the smart money does, which is in the big swing waves. Also, read our ultimate guide on the Ichimoku Cloud. The main advantage of swing trading is that it offers great risk to reward trading opportunities. In other words, you’re going to risk a smaller amount of your account balance for a potentially much bigger profit, compared to your risk. If you were to take a swing trading course right now, I believe that the current market conditions would allow any trader using the proper trading technique to achieve solid results.

  • trading webinars which cover various topics related to the Forex market like central bank movements, currency news, and technical chart patterns.
  • You can close your trades with maximum profit even after 2 to 3 days of entering the trade, if you trade lower time-frames like 4-hour or 1-hourly charts.
  • Using technical indicators can reduce the risks of speculative trading and help you to make clear decisions.
  • Here is another strategy called a weekly trading strategy that will keep you sane.

Although some have made it look easy, any mistakes will be felt where it hurts the most, your income. And unfortunately, as is the nature of market speculation, lessons are often only learnt the hard way.

The swing strategy for beginners

This style of trading is not about being right or wrong. Get rid of that mindset. We’re trading based on math.

On the opposite end of the trading scale, we have position trading or investing, this is basically long-term buy and hold strategies that whilst they may pay off when you are ready to retire, they are not suitable for anyone looking to make a living as a trader, like you and I. I’m not going to say that your broker ‘wants you to lose’, but I think saying they want you to day-trade is a fair assessment.

If you’re trading a $600 or $1000 account, your account must allow you to trade micro lots. A micro account allows you to trade in 0.01 lots, which means each pip is worth $0.10 (when USD is second currency listed, such as EUR/USD).

On the other hand, risking $1 to make $1 or only make $0.75 isn’t as favorable. Swing trading exposes a trader to overnight and weekend risk, where the price could gap and open the following the session at a substantially different price. Swing trading involves taking trades that last a couple of days up to several months in order to profit from an anticipated price move. The goal of swing trading is to capture a chunk of a potential price move.

There are a few things that I think we should consider before getting started. I like a bit of both swing & action trading can you give more info on 4H swing trading. Since I have been using price action ( which you showed me) my trading has become more stable less losses. Great to hear, Dan. The extra time to evaluate setups along with market conditions is one of my favorite aspects of swing trading.

Say for example, you catch a monthly reversal and hold the trade for three or four weeks and it happens to go your way, you will make some cool bucks. Although this article advocates for swing trading, let me tell you upfront that swing trading is not for everyone.

swing trading forex strategies