Forex Swing Trading
The Forex market is a good market to
swing trade, for a few reasons:
- It can be quite volatile
- There are at least six major currency pairs to trade so there is always
opportunity
- It is very liquid
- It responds well to technical analysis
If you learn to swing trade stocks or futures the same technical analysis
can also be used for the Forex market
The following simple method will get you started in swing trading Forex:
- Make sure that you have charted and drawn all the significant
support and resistance lines, both horizontal and trend lines. Check at
least the daily, 1 hour and 15 minute time frames.
- Watch and monitor the momentum of the forex pair as the price
approach's the support and resistance lines. You are looking for signs
that the momentum is decreasing significantly, or reversing when getting
close to the lines.
- Use a 5 period and 15 period simple moving average crossover to
signal that the trend is reversing, along with the momentum reversal
this is a good entry point.
- Have a target in mind before taking the trade, this could be a
nearby support or resistance line, the edge of a Bollinger band, or when
the 5 and 15 moving averages cross over again.
I'm going to give you a big secret to trading, in fact this one of
the biggest secrets that even many so called professional traders don't
understand.
Many traders try and use the Stochastic Indictor as a
momentum indicator, in fact many
call it a momentum indicator. The truth is that it is a very poor
momentum indicator because it is range bound, it can only go between 0
and 100, whereas momentum has no range limits.
What often occurs is that the stochastic indicator will hit 90-95 and
many say it is now over bought, time to sell, but because the momentum
is still strong the price keeps increasing, and it becomes a bad trade.
This is a big mistake that they continue to teach at all the newbie
trading seminars!!!
If you want to use the stochastic indicator as a momentum indicator
only use it between about 25 to 75, outside that range you can't trust
it.
The good news is that there is a very simple momentum indicator that
is very accurate and easy to setup and use, lean more about it here
If you watch the set of free trading videos
you will be well on the road to becoming a professional trader by
not making simple trading mistakes.
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