Home Finance What Is Swing Trading and How to Trade This Strategy?

What Is Swing Trading and How to Trade This Strategy?

Source: investmentu.com

In exchange trading, new ways to make a profit regularly appear. The swing trading technique is in demand among analysts and forex trainers, but it is difficult to imagine its use in practice. It has a number of nuances, which is why it often scares away beginners, but swing trading for beginners shouldn’t scare away.

Features of swing trading

The word “swing” refers to the natural cycles of the market. For example, the market shows 5 days of growth, 2 days of decline. Swing trading is a trading style in which a trader must recognize the beginning of a cycle, enter a trade and use the dynamics effectively.

Unlike other types of trading, in swing trading it is necessary to keep positions open for 1-5 days. The main principle is to determine the further movement of the trend. When the market price approaches the support line, the player opens a long position, and a short position approaches resistance.

There are several advantages to this type of trading:

Source: corporatefinanceinstitute.com
  • independence from the direction of the market. If a trader wants to trade effectively, he needs to be able to determine the trend, but the direction of the market does not really matter;
  • calm trading. It does not require a huge waste of energy, there is no emotional stress
  • high income. When compared with scalping, with a competent approach, you can earn 2-3 times more.

But due to a number of disadvantages, this type of trading is not suitable for everyone:

  • considerable initial capital. If compared with intraday trading, then due to large time intervals, more money will be needed;
  • experience required. This method is not suitable for beginners in the Forex market. It is necessary to be able to determine the phase of the market, calculate profits and risks.

You can’t blame technical instruments for losses. The success of a person depends solely on his skills, experience, training.

For successful trading, you must adhere to the following rules:

  1. timely entry. If the transaction is just opened, it starts to go to a profitable point. If a trade moves to a losing point within a couple of hours, it is immediately closed;
  2. if the trader has not reached the goal, but continues to make a profit, it is better to transfer the position to the next day;
  3. a losing position cannot be carried over to the next day.

With a small profit, the trader should exit the position if it shows the first signs of a stop.

Source: stocksoftresearch.com


Swing trading is a technique that requires a special approach. It is not suitable for everyone, but studying it allows you to become a “universal soldier” who can trade effectively in any conditions. To get an outstanding result, you need to master the theory, know trading tactics and tools.

But it is important to understand and feel the market, to be able to recognize the beginning of the cycle in a timely manner. With constant development and practice, you can learn to work with any tools, regardless of current events in the market.