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Swing Trader Strategy - Swing Trading Systems

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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

    

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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.

 

Forex Swing Trading