Swing Trading with a predominance over day-trading?

Day-trading and scalping are by far the most popular approaches to trading on Forex market. What it comes from? Probably from the subconscious belief that the more trades we make, the more profit we will make. The second point is our willingness to act. Since we are sitting at the computer, then "we should open something". With this approach, there is clearly a lack of two things - strategy and patience. For people suffering from the above syndromes, an effective remedy may be ... Swing trading.

More does not mean better

Nobody has proven a close correlation that more transactions will give better results. Not only that, logically, it can be said that the opposite is true. After all, each trade is a necessity to bear the cost of the spread, the commission and sometimes the slippage again. It is also a risk of wrong entry point identification. So the more positions, the more risk. But of course, to earn money you have to open something :-). Just "something" does not mean "anything." Therefore, it becomes the foundation strategy.

It is worth considering whether our strategy should assume opening a large number of positions in a very short time. Or maybe it is better to increase the time interval, reduce the number of transactions, and thus the risk and focus on quality?

What is Swing Trading

Swing trading is about keeping your position for longer than one day, but shorter than a few weeks. In this respect, it ranks between day-trading and positional / medium-term trading. The foundation of swing trading strategies is usually technical analysis, but it also happens that decisions are made on the basis of current macroeconomic events.

For swing-traders the key issue is the moment the position is opened. They often look for ongoing, developed trends and try to join them while waiting for a correction (to achieve a better price to enter the transaction). Usually the ratio of potential profit to potential loss must be noticeably larger. However, thanks to this we do not have to try to maintain high efficiency of 70-80%.

READ NECESSARY: Timeframe in the Forex market. We choose the time interval.

Due to the fact that the time horizon of the life of the position is up to several weeks, the fundamental analysis is not irrelevant here. Playings for the market sentiment, which may shape, for example, the scenario of the outbreak of war in a country engaged in the production of oil is an opportunity for a swing trader, which should be used. Unexpected macroeconomic or political events can often have a major impact on medium-term trends.

Swing trading a trend

From the previous paragraph it can be concluded that swing trading is only a game in line with the trend (the so-called trend following). In most cases, it is just like that and it results from the very assumption of swing trading (several days single positions). However, there are traders who use this type of trading successfully to play against the long-term trend. It is very important in swing trading to analyze several intervals simultaneously. This gives us a broader view of the whole situation and also allows us to take advantage of short-term feedback movements.

For example, there is a clear upward trend in the daily interval. At the same time, on the lower interval - one hour and half an hour, you can see the beginning of the correction, which may take up to several days. This is an opportunity for a swing trader to take advantage of the signals generated from lower time frames and a way to optimize profits.

Summation

If you use day-trading or scalp the market on a daily basis and do not have much effect ... When you make many trades, which ultimately only make you spin around zero and earn commissions to the broker ... will allow you to maintain your position for up to several days… Maybe it's high time to try swing trading? 😉