Swing Trading in Currency Forex Market – What is Unique About This Trading Method?

In currency forex market, it is difficult to pinpoint a single best forex trading style. Forex traders differ in terms of their individual personalities, risk taking abilities and emotional balance. Most traders choose a trading style that suits their personalities the best.

A day trader for example has to complete his entire trading transaction in a single day. Hence day trading forex currency requires the trader to remain vigilant and track currency price movements continuously. This is done with a view to exit trades at the first available opportunity. Trend traders on the other hand have the benefit of carrying forward their deals. These traders simply trade in the direction of the market trend and are referred to as Swing traders.

Swing trading style is a long term trading style. Trade positions are held open by swing traders for periods ranging from couple of days to weeks.

Swing trading in forex market trading denotes transactions undertaken in the direction of the major market trend. These traders prefer to trade in the G7 major currency pairs since these are normally more liquid compared to cross currencies and emerging market currencies. For example – when choosing between the two currency pairs Australian Dollar/ Japanese Yen and Euro/U.S. dollar, a Swing trader will prefer to trade in the latter pair.

Large forex market players like banks normally use swing trading. There is no thrill involved in this type of trading since constant monitoring of price movements is absent.

Swing traders typically

1. Trade in the direction of the forex market’s major trend.
2. They are mentally prepared to hold on to transactions instead of squaring off immediately.

Going along with the trend enhances the chances of booking profits in forex market trading. The higher the time frame of the trend (8 hours or more) greater is the chance of making sizable gains in forex trading.

Swing trading offers the comfort of sitting back and relaxing instead of constantly monitoring the currency forex market minute by minute. In this type of trading once you identify the major trend and enter into a transaction, no further efforts are required till you exit.