Forex Swing Trading

By Kelly Price

If you are a novice trader one of the best ways to get on the road to Forex trading success is to learn Forex swing trading. You can learn how to do it and be trading with confidence in around a week or so and here we will look at how to do it correctly.

Before we look at a swing trading strategy, lets look at why it will always work.

The reason it works is because traders always push prices to overbought levels in an up trend and to far down in a down trend and this is greed and fear at work. Traders push prices to far in either direction and then, prices come back to more realistic levels which reflect the fundamentals.

Look at any currency pair you like, on any chart and you will see this occur. All you need to do is trade against these short term price spikes and take your profit as prices come back to normal value.

So how exactly o you swing trade?

Lets use the example of an up trend. Prices are trading up and suddenly accelerate, you then look for chart resistance and wait for prices to test it and not penetrate it. You then need to time your trading signal and for this you can use some momentum indicators. A momentum indicator simply measures the velocity of price and you want momentum to decrease and turn down as resistance is tested.

A good indicator which can do this is the stochastic, we have covered it in other articles and you can find plenty of free information on it online so check it out. You Simply wait for the stochastic lines to go into the overbought area and wait for a turn down as resistance holds and your in the trade.

You place your stop above the level of resistance which has just held and then set a target which is normally the next strong level of support and just before it tests this level, you bank your profit.

The above is a simple strategy you can have confidence in, as you know it works and you only need to use charts and one or maybe two indicators to time your trades.

If you trade into overbought and oversold levels using the above system, you could soon be making triple digit profits in just 30 minutes a day and enjoying Forex trading success.

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