In the Forex industry, there are several types of styles that a trader follows to earn his livelihood. Some of the popular styles are – day trading, swing trading, scalping, position trading, and so on. Each of these styles is different from the others. In this article, we will concentrate only on swing trading.
What is swing trading?
In this style, a trader buys the currency and holds it for a couple of days or several months to sell it at a higher price to earn money. These Singaporean traders mainly utilize the technical indicators to search for an ideal entry point to the market, though sometimes they use fundamental analysis as well. The investors take their profits or losses by following two ways – i) they utilize the risk to reward ratio on the basis of stop-loss and take-profit limit, or ii) they take losses or profits based on the movements revealed by technical indicators.
This style involves retaining a financial instrument for more than a single trading session. It can range from several weeks or 1 or 2 months but no longer than that. The objective of this strategy is to capture a period of any potential move. In the Forex industry, the swings are built up of two different parts – the swing point and the body. The bottom values are called “low swing point”, and the peak values are called “high swing point”.
How to prepare yourself to be a swing trader?
1. Be patient
These investors should be patient because they have to retain their financial instrument for a longer duration. Sometimes it can go for several weeks or months. Hold the currency based on the volatility of the market. Know more about the best commodity broker in Singapore and then you will get the idea why we are asking you to trade in a conservative way. Aggressive attitude always result in big losses in this industry.
2. Fewer trades
These people enter into the trades less than others. They choose a higher timeframe to retain their instrument for a longer duration. Thus, they can hardly enter the trades. As a result, opportunities become limited.
3. Slower trades
The experts never mind this style’s pace because they know that it will be fruitful for them. Other trading strategies allow an individual to enter the market frequently, which can result in financial losses.
4. Have a permanent job
You must have a full-time job to be a professional investor in the Forex industry. Since you have to hold a currency for a longer time, it is better to have another source of earnings.
Tactics of swing trading strategy
These traders always use technical indicators to find out the ideal entry or exit points. Moving average crossover, momentum, cup and handle, head, and shoulder chart patterns are familiar terms to them because they use these indicators a lot. They develop a concrete business plan by utilizing other technical concepts to predict the upcoming trend. Two things that you should know to be a successful one –
It is said that the opportunities in this kind of style may increase when investor shifts to a higher timeframe instead of a lower one, and the signals, in this case, will be more reliable. Many professionals encourage beginners not to get frustrated if they don’t find an opportunity in a shorter timeframe. They can choose to 4 hours chart, which can be more informative.
Resistance and support levels
Resistance and support levels can help a newbie to identify a potential entry or exit point of a chart. Finding resistance and support level is regarded as the most vital part of this market. The support level can be ideal for buying currencies, while the resistance level is considered a perfect place for selling a currency.
You can also evaluate the momentum, trendline, moving average crossovers, etc. to find out the potential trades.