The Powerful Advantages of Swing Trading the Forex Market

One of the most vital aspects of trading success if to find out who you are as a trader.  Now, that may sound like Dr. Phil pop psychology, but it is true.  Successful traders are successful because they have found an approach to the market that agrees with their unique psychological makeup, and this is essential.  One of the most vital aspects of finding out who you are as a trader is discovering which timeframe of trading best agrees with your personality.

Screen Time

As a new trader, trading is exciting.  The rush of opening, managing, and closing trades is exciting; therefore, most new traders are drawn to the idea of intraday scalping.  However, there are a few points of consideration that many new traders do not think about.  First of all, what do you want the next ten years of your life to look like?  Many people get into trading financial markets in order to enjoy more free time for other activities.  A trader who scalps the market is not going to have that much more free time than the typical 9-5 offers.  As a scalper, a trader will have to be in front of the screen to open, manage, and close trades.  Is that what you want to do for a number of years?  If so, then great.  If not, then there is another alternative to consider swing trading.

Swing Trading

This style of trading involves holding trades for anywhere from 12 hours up to several days.  This style of trading does not require a trader to be in front of the computer to initiate, manage, or close trades, although a trader will have to put in a specific amount of screen time each day analyzing the market and looking for potential setups.  Swing trading will generally have much bigger stop losses and profit targets than scalp trading, and this can be a difficult transition for traders to make initially.  However, if traders can be disciplined to sit through more volatile swings in the fx market, then swing trading has major advantages over scalping.

• Lower transaction costs because few trades are being executed.
• Significantly less screen time.
• Less stressful style of trading since trader is not watching trade activity tick-by-tick.
• Not as emotionally demanding as scalping.

Best FX Pairs

The beauty about FX Trading is that most pairs are great for swing trading.  Swing traders are typically aiming to pick up at least 60-70 pips in the forex market when they take a swing trade, and these swings happen on a daily basis on most pairs.  Now, swing trading is easiest with pairs that are less volatile.  The reason is simple.  Volatile pairs may move 80% toward target, and then swing back the other way and erase all the gains before it continues toward the target again.  These highly volatile pairs can make swing trading a challenge.  In this table below, volatile and low-volatile pairs are listed.  These descriptions are not perfect, since currency pair volatility can shift dramatically with new market conditions, but as a general rule of thumb, this is how most traders view these pairs.

Swing trading has many advantages to offer the trader.  On top of those listed above, traders who still hold full-time day jobs may find swing trading a very good fit for their lifestyle and time commitments. Keep in mind that trading forex on margin is risky. Never speculate using money you cannot afford to lose.

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1. Forex Pips Secrets