It is a trading style that requires patience to hold your trades for several days at a time. Swing trading stands between two other popular trading styles: day trading and position trading.

Swing traders identify a possible trend and then hold the trade(s) for a period of time, from a minimum of two days to several weeks.

It is ideal for those who can’t monitor their charts throughout the day but can dedicate a couple of hours analyzing the market every night.

Swing trading is best suited for those who have full-time jobs or school but have enough free time to stay up-to-date with what is going on in the global economy.

Swing trading strategies employ fundamental or technical analysis in order to determine whether or not a particular currency pair might go up or down in price in the near future.

Identifying Swings

Swing trading attempts to identify “swings” within a medium-term trend and enter only when there seems to be a high probability of winning.

For example, in an uptrend, you aim to buy (go long) at “swing lows.” And conversely, sell (go short) at “swing highs” to take advantage of temporary countertrends.

Because trades last much longer than one day, larger stop losses are required to weather volatility, and a forex trader must adapt that to their money management plan.

You will most likely see trades go against you during the holding time since there can be many fluctuations in the price during the shorter time frames.

It is important that you are able to remain calm during these times and trust in your analysis.

Since trades usually have larger targets, spreads won’t have as much of an impact on your overall profits.

As a result, trading pairs with larger spreads and lower liquidity are acceptable.