If you are just learning Forex trading, chances are this is the first time you encounter the term Swing Trading. It is common knowledge, most novice traders really like scalping or day trading. Some of them still survive with a short-term trading style, but there are also those who end up not comfortable, then look for new trading methods. That is why the Swing Trading Strategy is a promising alternative.
What is Swing Trading?
The most simple understanding, Swing Trading is a trading strategy that places Buy or Sell execution at price reversal points, so that you can get the most profit possible when the price is moving in a certain direction.
Whereas traders who often use this system are often dubbed "Swing Traders". Swing Traders usually look for currency pairs with a fairly wide trading range. However, in order to run well, an effective Swing Trading system is needed which at least pays attention to two basic and very important components, namely proper identification of trends and stop loss.
Swing Trading Comparison With Scalping The first time you get acquainted with the world of trading, novice traders must be looking for all kinds of ways to profit in the shortest possible time. From there, most of them have been fed with all kinds of scalping tips and tricks, right? Indeed, Scalping is quite easy to do, but the risks are also relatively large. To make a profit, traders are usually hooked to open many positions at one time.
These high-risk habits will become even more dangerous if novice traders do not understand Money Management properly. Because more than one position is opened, traders are required to dedicate a large amount of attention and time, in order to be able to oversee the accumulation of points earned for each position.
Also Read : Tips for Choosing a Binary Options Broker
It does not matter if you do have free time, but if busy, negligence will result in large losses on the trading account. The solution, Swing Trading Strategy offers flexibility and ease in managing trading position setups. First, the Swing Trading Strategy does not require traders to open many trading positions.
One position per week is enough to make a profit. Every position on Swing Trading makes maximum use of trend movements. Expectations, each Swing Trading strategy position is targeted to reach hundreds of Pip. Second, each position focuses on quality, not quantity. Discard bad habits to open many positions.
The Swing Trading Strategy focuses on signal accuracy and risk management for each position, from opening to closing. Third, the trading system strategy applies the "set and forget" principle. Because each Swing Trading position has been secured with risk management and the targets are also clear, you no longer need to keep an eye on price movements continuously.
The three factors above clearly provide advantages for busy traders, but before learning to apply the Swing Trading strategy, you must understand the understanding and discipline of the system.
Basic Swing Trading Applications To get Swing Trading signals, we need to identify the direction and strength of the trend first. It should be noted, the success of the Swing Trading strategy largely rests on the process of identifying the direction of the trend's movement. There are many methods to recognize the direction and strength of a trend, but the simplest way is to observe the price movement itself on the chart.
After recognizing the direction of the trend, the next task is to determine where prices will potentially move later. Remember, the key word is "potential", so no matter how good the Swing Trading strategy signals, there is definitely a possibility of missed. Relax, we will learn how to handle the worst scenario by setting up a trading system.
Developing a Swing Trading System Basically, a trading system is a guide for traders to determine what trading steps should be taken when conditions A to Z appear.
Rules for opening and closing trading positions also include important components in a system. There are several indicators that we can use to compile the Swing Trading system, for example Weekly Pivot Points. Pivot Points can show where Support and Resistance are located objectively, so we no longer need to guess or draw where the S / R position is. Support and Resistance can help us to know at what price level the price will potentially continue to move in one direction or even reverse direction.
For example, if the price is climbing, then the Resistance level is the "visual limit", if the price is able to break it means that there is a big possibility that it will skyrocket. Conversely, if prices display resistance candlesticks such as Pin Bars, it means there is potential for a reversal of the trend.
Read cell
a. During the Uptrend
In the pair GBPUSD (Daily) above, the trend is quite clear still climbing. The next question, about where the Cable will move? Does he still have enough momentum to continue moving up or instead turn around, dive down? Take a look at the green line projection, the price is predicted to break R1 (first resistance level) at Weekly Pivot Point, go down a little to test this level, then climb back up to reach the next resistance. In this Bullish scenario, you can open a trading position when the candlestick body closes above the R1 level.
There is also the possibility of price reversing from the red line projection. If it turns out that the price is trying to reach the R1 level but is still closed below R1, prepare a Short (Sell) position. Candle formations such as the Bearish Pin Bar, Three Inside Down, Evening Star can confirm the potential reversal from Uptrend to Downtrend.
b. During a Downtrend
Now we move to the USD / JPY chart (Daily). On the chart above, even though prices seem relatively broken, the Bearish candlestick line still dominates (19 red candles vs. 16 green candles) with the High and Low values steadily declining. During a downtrend, the red line projects the potential for prices to continue to decline. Prepare a Short position when the price closes below the S1 level.
The price is still possible to test the S1 limit again, but if the price has closed below this level, the Support level becomes the Resistance level. The reversal scenario is shown by the movement of the green line. Initially, prices appear flat as an indication that the strength of Buyers and Sellers is still in balance. Alert with a Long (Buy) position when the price had slipped to touch the S1 limit, but the price was even closed above it.
Look for Candle Morning Star formations, Three Inside Up, Bullish Pinbar to confirm the reversal signal from Downtrend to Uptrend. Note: All charts above use the Daily timeframe because Pivot Points are used using closing prices, highs and lows for the past 1 week. If you want to use the H4 timeframe, use the Daily Pivot Point.
Stop Loss or selling loss is also one important component in a trading system. Many Forex traders usually execute market orders with the Swing Trading Strategy without first setting up a Cut Loss level. In fact, there is no trading system that guarantees 100% win rate. For losses to be controlled, the Swing Trading system must be clear
What is Swing Trading?
The most simple understanding, Swing Trading is a trading strategy that places Buy or Sell execution at price reversal points, so that you can get the most profit possible when the price is moving in a certain direction.
Whereas traders who often use this system are often dubbed "Swing Traders". Swing Traders usually look for currency pairs with a fairly wide trading range. However, in order to run well, an effective Swing Trading system is needed which at least pays attention to two basic and very important components, namely proper identification of trends and stop loss.
Swing Trading Comparison With Scalping The first time you get acquainted with the world of trading, novice traders must be looking for all kinds of ways to profit in the shortest possible time. From there, most of them have been fed with all kinds of scalping tips and tricks, right? Indeed, Scalping is quite easy to do, but the risks are also relatively large. To make a profit, traders are usually hooked to open many positions at one time.
These high-risk habits will become even more dangerous if novice traders do not understand Money Management properly. Because more than one position is opened, traders are required to dedicate a large amount of attention and time, in order to be able to oversee the accumulation of points earned for each position.
Also Read : Tips for Choosing a Binary Options Broker
It does not matter if you do have free time, but if busy, negligence will result in large losses on the trading account. The solution, Swing Trading Strategy offers flexibility and ease in managing trading position setups. First, the Swing Trading Strategy does not require traders to open many trading positions.
One position per week is enough to make a profit. Every position on Swing Trading makes maximum use of trend movements. Expectations, each Swing Trading strategy position is targeted to reach hundreds of Pip. Second, each position focuses on quality, not quantity. Discard bad habits to open many positions.
The Swing Trading Strategy focuses on signal accuracy and risk management for each position, from opening to closing. Third, the trading system strategy applies the "set and forget" principle. Because each Swing Trading position has been secured with risk management and the targets are also clear, you no longer need to keep an eye on price movements continuously.
The three factors above clearly provide advantages for busy traders, but before learning to apply the Swing Trading strategy, you must understand the understanding and discipline of the system.
Basic Swing Trading Applications To get Swing Trading signals, we need to identify the direction and strength of the trend first. It should be noted, the success of the Swing Trading strategy largely rests on the process of identifying the direction of the trend's movement. There are many methods to recognize the direction and strength of a trend, but the simplest way is to observe the price movement itself on the chart.
After recognizing the direction of the trend, the next task is to determine where prices will potentially move later. Remember, the key word is "potential", so no matter how good the Swing Trading strategy signals, there is definitely a possibility of missed. Relax, we will learn how to handle the worst scenario by setting up a trading system.
Developing a Swing Trading System Basically, a trading system is a guide for traders to determine what trading steps should be taken when conditions A to Z appear.
Rules for opening and closing trading positions also include important components in a system. There are several indicators that we can use to compile the Swing Trading system, for example Weekly Pivot Points. Pivot Points can show where Support and Resistance are located objectively, so we no longer need to guess or draw where the S / R position is. Support and Resistance can help us to know at what price level the price will potentially continue to move in one direction or even reverse direction.
For example, if the price is climbing, then the Resistance level is the "visual limit", if the price is able to break it means that there is a big possibility that it will skyrocket. Conversely, if prices display resistance candlesticks such as Pin Bars, it means there is potential for a reversal of the trend.
Read cell
a. During the Uptrend
In the pair GBPUSD (Daily) above, the trend is quite clear still climbing. The next question, about where the Cable will move? Does he still have enough momentum to continue moving up or instead turn around, dive down? Take a look at the green line projection, the price is predicted to break R1 (first resistance level) at Weekly Pivot Point, go down a little to test this level, then climb back up to reach the next resistance. In this Bullish scenario, you can open a trading position when the candlestick body closes above the R1 level.
There is also the possibility of price reversing from the red line projection. If it turns out that the price is trying to reach the R1 level but is still closed below R1, prepare a Short (Sell) position. Candle formations such as the Bearish Pin Bar, Three Inside Down, Evening Star can confirm the potential reversal from Uptrend to Downtrend.
b. During a Downtrend
Now we move to the USD / JPY chart (Daily). On the chart above, even though prices seem relatively broken, the Bearish candlestick line still dominates (19 red candles vs. 16 green candles) with the High and Low values steadily declining. During a downtrend, the red line projects the potential for prices to continue to decline. Prepare a Short position when the price closes below the S1 level.
The price is still possible to test the S1 limit again, but if the price has closed below this level, the Support level becomes the Resistance level. The reversal scenario is shown by the movement of the green line. Initially, prices appear flat as an indication that the strength of Buyers and Sellers is still in balance. Alert with a Long (Buy) position when the price had slipped to touch the S1 limit, but the price was even closed above it.
Look for Candle Morning Star formations, Three Inside Up, Bullish Pinbar to confirm the reversal signal from Downtrend to Uptrend. Note: All charts above use the Daily timeframe because Pivot Points are used using closing prices, highs and lows for the past 1 week. If you want to use the H4 timeframe, use the Daily Pivot Point.
Stop Loss or selling loss is also one important component in a trading system. Many Forex traders usually execute market orders with the Swing Trading Strategy without first setting up a Cut Loss level. In fact, there is no trading system that guarantees 100% win rate. For losses to be controlled, the Swing Trading system must be clear