Forex Swing Trading Strategies

Forex Swing Trading Strategies

Forex swing trading strategies are a good way to enter into a trend trade at a low risk point, rather than at the start of a trend.

Typically, the start of the trend is always a risky period because you don’t know if the trend will actually establish itself and you will tend to be trading in choppy price conditions.

Once the trend is established however, it will tend to continue so actually the best part of the trend to get in on is the middle of the trend. With Forex swing trading strategies, you will be able to identify good entry points which will reap you great rewards if the trend continues but won’t lose you that much money if that’s the end of the trend.

Before we get into detail I want to recommend a proper and reliable broker where you can work on your swing trading strategy: Plus500. In case you are not already registered there, I highly suggest you will do it now and try this strategy in practice (with their free demo account).

Sign up to Plus500.com and get started at this CFD broker!

Risk warning: 77% of retail CFD accounts lose money.

The Best Way To Apply Forex Swing Trading Strategies

To succeed with Forex swing trading strategies, the most important thing you need to keep in mind is your goal of entering at a low risk point in the middle of a trend. That means that you’ll want to get in on an existing trend, and not try to guess whether a trend is beginning to form. This key mindset alone will save you hundreds of pips over time. It will help you greatly to know that a trend will typically go on far beyond what most traders would anticipate, so it’s never too late to enter into a swing trade. And if you happen to be wrong, which can happen believe it or not, you will be entering at a low risk point so your losses will be nothing compared to your profitable trades.

The best low risk point is a trend pullback that forms a swing low. A swing low is a bar that has a low point that is lower than the most recent preceding and following bars. Once a swing low is formed in a trend, you can look to enter at around that price and place your stop below the swing low. Generally, if the trend is strong, it will move strongly beyond the swing low and never execute your stop, giving you a profit that is many times the multiple of your risk. With a swing trade, you can often be able to capture 10-15x your initial risk in profits if the trend sustains. Pretty good eh?

The Most Important Part Of All Forex Swing Trading Strategies

While a low risk entry point is important in any trade, it’s your exit that ultimately makes you the money. It’s also the one area of trade management that most traders fail at, especially in the arena of swing trading. If you cut your profits short in a trend, you will ultimately lose money because you need those profits to pay for the losses that will come when you enter into the trend too late and you catch a reversal instead. However, you need to get out of the trend early enough as well, otherwise you stand to lose the bulk of your accumulated profits when the trend reverses.

Personally, I have had the best results with using the MACD indicator to guide me in where to exit the trade. Typically, as the trend builds up steam, the MACD histogram will form higher and higher peaks, but as the trend exhausts you will observe something very interesting. There will come a point where the price makes a higher swing high, but the MACD histogram shows a lower peak. This is called a divergence in the MACD and is one of the surest signs of a trend reversal. When you see this early warning sign, be sure to take your profits and run!

Video Which Explains Swing Trading Overview:

The Final Word On Forex Swing Trading Strategies

All in all, Forex swing trading strategies are a very good way for you to profit from the trend without worrying about early whipsaws that will destroy your account. Because you’re entering at a low risk point into a high profit trade, you will have the odds in your favor if you execute this trading methodology the right way.