Swing trading is a style, not a strategy, and it operates in relatively short periods of time, both in the short and medium term. This type of trading is characterized by short periods of daily trading and longer trading time frames. To make the picture a little clearer, the swing trading duration is not so short to have to use all your time observing the behavior of the market, but it does have a duration short enough to provide the user with an endless number of trading opportunities within reach.
To perform the Forex swing trading, there is a series of currencies that are considered appropriate for this purpose, such as the EUR / USD pair, CFDs such as the Ibex 35, the cryptocurrencies and, in short, those assets that are volatile.
A swing transaction leads to the identification of the different opportunities that can generate profits in a short period of time; it is about proceeding to the identification of diverse graphic patterns to later wait for the opportune moment to operate.
A swing trader is that investor that seeks to analyze the graphs to determine the levels, events or circumstances that will cause the change of tendency of a certain currency or the acceleration of its rhythm. This technical analysis is fundamental in the tools used for swing transactions. The key to success lies in the study of a variety of short-term graphs and technical indicators in order to understand the market position.
Generally, in the market there are only two types of movements, which are: inside the ranges and inside a trend. A faltering market will ensure that it is within a certain range until there are an acceptable number of buyers or sellers to force a break in the range or a breakout.
There are two ways in which a swing trader user obtains benefits from a market that has movement within two or more ranges. The first is to access the sale of the currency when it is near the highest value, and buy it when it is at the lowest value in the range. The second is to place a purchase order that is above the maximum value of the range and a sales order below the minimum value. If the latter happens, the trader is implying that the range will go bankrupt.
If we are in the presence of a market full of trends, the strategy to use is also quite simple. The trader should only know how to identify the parameters of the trend and then acquire the best possible way of entry. There are scenarios in which the user is aware that the values in the market rise, but does not do anything about it and loses the opportunity. Therefore, the incentive that has the same is to go behind the market buying at higher levels. In this case, it is recommended to opt for the search of some other trend that is just beginning.