Swing trading: A guide

Swing trading is a short term trading method which is mainly used when trading forex, options and stocks.

Unlike day trading which lasts for less than a day, the same trading positions can last between two days an two weeks. The objective of swing trading is to find the overall market trends and then capture the gains within the trade. Just like day trading, swing trading involves commission costs and specific risks which are higher and different from regular investment strategies.

swing trading

Forex swing trading

Swing trading is similar to the long trend trending, although in the swing you are looking for the shorter market moves. The swing trades used on the FX swing trader chart is similar to the one used in options trading. It can be as little as five minutes and can give as large as one hour. The swing trade can use a combination of both technical analysis and fundamental analysis to guide their decisions. Whether the market has an extensive range bound or a more extended term trade doesn’t matter, as the forex trade does not hold the positions for a more extended period.

Swing trading is affected by volatility such that the most volatile markets suit the traders the more. The higher the volatility, the more the forex market becomes. The higher the number of the short term price movements, the higher the swing trade opportunities becomes.

Swing trading is suitable for the forex market due to many reasons:

  • The trades benefit from the market volatility.
  • There is enough market volatility to provide interesting moves in prices.
  • The trading is completed within a short period.

As noted, the short term trades need close monitoring. The long term traded may not be fully active and that’s why they require adequate trading discipline. Most beginners find the forex trading a suitable option to start of their trading. So, if you are young investors test the swing trading out but test your skills using a demo online trading account.

Forex swing trading process

  • Move to the daily time frames.
  • Draw the significant support and resistance levels.
  • Evaluate your momentum.
  • Watch for the price action against the indicator signals.
  • Identify your exit points.
  • Calculate and manage your risks.

You can be a swing trader if:

  • You are willing to have large stock losses.
  • You can remain calm when the trades act against you.
  • You are patient, and you can hold your positions for up to two weeks.
  • You need the slower faced trading styles.
  • You have another full-time job, or you are a student.
  • You can take a few trades and be extremely careful to have a good setup for your trades.
  • You can hold your trades for a few days.

Swing trading is not for you if:

  • You are impatient, and you like a quick answer of whether you are right or wrong.
  • You get anxious and sweaty when a trade goes against you.
  • If you cannot spend many hours in a day analyzing the market.
  • You need for the action-packed trading styles.
  • You cannot stand to hold your positions for many hours.


Swing trading is among the best trading styles we have in the market. It works best to the volatile markets, and it also provides enough trading opportunities. If you want to start investing a fair time amount to monitor the market with swing trades, the starting requirements are not many since the these styles don’t have longer time frames. Again, the swing trading is not suitable for all traders. Make sure that you use a demo account first.

Apart from the money management skill which is required in all forex trading styles, there are other good practices to observe in swing trading:

  • A good idea of how you will exit the market and also maintain it at a lower level than the profits you are anticipating.
  • Use the secondary indicators to confirm the signals of your primary indicators.
  • don’t trade against the market trend.