Swing trading is a specialist type of trading that aims to increase the probability of profit as prices move from one level to another. Unlike day trading, the trader usually holds the sales for a period of five to six days. However, the actual period of holding the trade depends on the market situation and the potential to make profits. Swing trading calls for certain strategies to make profitable sales, as it involves a considerable amount of risk.
Basic Tips for Swing Trading
Opt for popular currencies
A swing trader should try to focus on frequently traded currency pairs. In the case of currency pairs that are not traded commonly, one cannot easily determine optimistic or pessimistic trends. Thus, it is better to be on the lookout for upward trends in popular currency pairs and invest promptly.
Hold the trade
A wine tastes better when you hold the drink rather than gulping it down. Similarly, currencies trade better when you hold the sells for a longer period. Although this invites a considerable amount of risk, holding the sells also offers the opportunity to catch market upswings. Selling the trade after too short an interval will get you out of the race for improved profit-taking.
Stay updated with news
One of the key attributes of a successful swing trader is knowledge about the latest market trends. Subscribe to websites or blogs related to forex news. In the course of time, you will be able to forecast market trends as a repercussion of an event.
Plan your trade
Always plan your trading for the day in advance. The planning should be based on your knowledge of current market trends. Try to develop a trading style that suits your personality.
"Virtually every successful trader I know ultimately ended up with a trading style suited to his personality." ~ Randy McKay
Planning and patience are the most desirable traits for a swing trader. You have to be patient as the prices move upward and sell the pairs at the most profitable price. To hone your skills, you should use the demo account made available by your forex broker.