You also need to be able to maintain focus over longer periods in order to identify trading opportunities. The basic idea of a carry trade is to borrow money at a low interest rate and then invest that money at a higher interest rate. Your profit is the difference between interest rates. In the forex market, carry trading is designed to take advantage of the differences in interest rates between countries.

Carry trades work in the forex market because you are always trading currency pairs, and if you keep a position open overnight, you receive the difference in interest rates between the two currencies. For example, interest rates in Switzerland are currently lower than those in the US. Every day you keep the position open, you will receive interest based on the difference in interest rates between the two countries. Sounds like easy money, right? For one thing, countries often change their interest rates.

For another, even if the interest rates remain the same, the value of the currencies could change and erode your profits from interest. If in the above example the US dollar drops significantly against the Swiss franc, your interest-rate profit would be wiped out and you could lose money. Carry trading relies more on fundamental analysis than technical analysis, so you need a good handle on macroeconomics. Considering interest rates are the profit driver, you obviously have to understand them and what political and economic factors affect them.

You also need enough trade capital to be able to keep your money in the market long enough to accrue significant interest. Price-action trading is a technical approach to forex trading and other financial markets that focuses solely on price movement. Prices over time give traders all the information they need. Price-action trading starts with the charts, as adherents watch how a price changes over time to carefully identify trends and pullbacks.

Once they identify a trendline they want to trade, they try to execute quickly in order to take maximum advantage of prolonged price movements. Price-action traders are extremely patient traders who can stare at charts for hours until identifying a trend they want to trade.

Position trading is all about fundamental analysis and holding long-term positions. Position traders may use technical analysis to identify opportunities or find entry points, but a position trader principally looks for macroeconomic or political reasons why one currency is mispriced compared to another.

Positions traders understand global economies and what moves currencies over the long term. And since they hold their positions for a matter of years, position traders need patience as well as conviction. You also have to be disciplined enough to ignore short-term volatility, and since you make your money when you are right and the market is wrong, you need a little arrogance too!

Some form of a trend-trading strategy is often used by swing traders or position traders, as it involves using technical analysis to find medium to longer-term trends.

To do so, trend traders have to filter out a lot of noise that comes from everyday market volatility. Which price movements signify the start of a trend and which are just the result of choppy markets? Most trend traders start with using technical indicators, such as moving averages or the Relative Strength Index, to figure that out. Trend traders make fewer transactions and hold on to positions longer than most other technical traders.

So if you prefer technical analysis to fundamental analysis, but like a longer time frame, trend trading might be your perfect strategy. A lot of forex traders closely monitor the economic calendar to avoid trading around big news releases because any sort of surprise can literally send the market off the charts. There are some brave souls who live to trade these moments, however.

Either way, news traders usually have a high risk tolerance and are more prone to seeking large profits than short-term traders like scalpers, who try to accrue a series of smaller gains. A bullish pennant tends to breakout higher when the triangle nears its convergence zone. The chart below shows two bullish pennants. A channel is another swing trading strategy popular among traders.

A channel is a period when an asset trades between two parallel levels. These levels are known as support and resistance and can happen horizontally or diagonally. The goal of a swing trader is to identify these channels and buy at the support and sell at the resistance.

The support and resistance levels are drawn by connecting two or more swings. A good example of a channel strategy is shown in the chart below.

In the example above, the goal of the trader is to buy when the price moves to the support and short when it tests the resistance levels. Obviously, the main challenge of a channel strategy is that it is often difficult to predict when a breakout will happen. There are other swing trading strategies such as using Fibonacci retracements, identifying support and resistance levels, fundamental strategies, pivot points, and using specific technical indicators to identify overbought and oversold levels.

While swing trading is a popular strategy, it also comes with several risks. First, the strategy has overnight risks, meaning that a pattern can change when you are asleep. For example, a central bank can make an unscheduled announcement, which could affect the arrangements of the patterns. A good example is in when the Swiss National Bank SNB removed the Swiss peg on the euro.

Second, at times, a thesis can be invalidated. For example, in the pennant example above, the price can breakout lower.

Therefore, we recommend that you practice the best risk management strategies in swing trading. These include always having a stop loss or a trailing stop and sizing your trades well. Are you interested in short selling? This can be a great way to make money if you are savvy and Heading in Forex is a trading approach that looks to make a tiny profit on each trade to compound those Overview Have you ever closed your positions in fear of a sustained pullback, only to see the market eventually move Leverage is an important concept in forex and stocks trading.

It refers to the amount of money that a broker Moving Averages MAs are often the first indicator introduced to a newbie in any financial market. They remain the bread-and-butter Your email address will not be published. Save my name, email, and website in this browser for the next time I comment. We are dedicated to demystify the world of forex trading for you — no matter what level you are on. Try now. Home Forex Education Forex Basics.

Swing Trading Strategies For Beginners by Richard Brase. September 22, in Forex Basics. This is the type of continuation gap that longer-term traders love to take advantage of, as it writes out the overall prevailing trend.

Remember, many traders will simply place trades based upon earnings reports and nothing else. This is where the fundamental and institutional traders typically establish their positions, moving the market much more than you will. So by following the herd, you can find yourself much more profitable. Traders all over the world use Fibonacci retracement tools to find a level to get involved in the market. The three most common levels are the With that in mind, traders will typically use their favorite candlestick pattern at these levels to take advantage of a well-known ratio.

Keep in mind that these ratios are not to the point. They are general areas. It means that you are looking at an area that could be an interesting place to play a reversal candle. The candlestick confirms that the support held, and the swing trader will start to buy there. You will see variations of this with engulfing candles, shooting stars, Doji candlesticks, and many other patterns.

It comes down to the traders favorite setup. However, they all start with that Fibonacci retracement level. Following a trend line is very crucial and you can see several times that you could have bought a stock at support. But what is even more impressive is when you break a major trendline to the downside. This shows a significant break of support and can lead to a nice swing trade on the short side for large-cap stocks.

However, most traders will move their stop loss is down to reflect recent swing highs on shorter time frames. Trading like this means being very patient, but this one trade could have been a bulk of your gains for the year, eliminating many broken trades in the process. You are on the right side of the market, and eventually, people need to start selling their stock that is now losing money, only to accelerate the market in your favor again. This one is straightforward. You are looking for a relatively flat exponential moving average that tells you when the market is consolidating.

What you are looking to do is buy support on the lower side and sell or short several times at resistance. You need to take advantage of these consolidation frames because they happen all the time. However, there is a risk of overnight gaps for all swing trades, but if a stock breaks out from consolidation, the initiated move can be powerful, so an extra level of caution is required.

Pyramiding is a reference to adding more and more positions in a particular direction. Swing traders are looking to take advantage of big moves, so it makes no sense to take your profits right away if you can avoid that. Perhaps you would start with shares. After that, what you break to a fresh, new high, you would then add 25 shares. After that, you might add another You can also pyramid when a stock consolidates to reduce the average costs.

But be careful, only do that if you are convinced that the company financials and outlook are still strong and reasonable for such an investment.

From a longer-term standpoint it can be profitable, but it does take a lot of patience as stocks will take quite some time to make these moves. Also, the fundamentals still have to prove that the additionally invested money is well invested.

Have you ever wondered what swing trading means? On the following page, we will walk you through the concept of swing trading as well as offer a selection of useful tips that you can use to optimize your trading efforts. Swing trading, when used correctly, is a highly efficient trading strategy. Although to get the full benefit of the strategy, you first need to study it and learn the ins and outs of trading.

Therefore, we strongly advise you to read our swing trading guide before you venture out and start trading on your own. Swing trading is a popular short-term trading strategy that makes use of short to mid-level trading windows, unlike day trading that makes use of short to very short trading windows.

This means that a swing trader typically opens and closes positions within a few days to a couple of weeks — sometimes even months. By doing this, traders can make use of traditional market movements that can be analyzed and predicted accurately using different methods. Swing trading originated from the stock market and is still a popular way to trade stocks around the world.

However, the same concept can be applied to any market, financial instrument, and asset. For example, a lot of people swing trading commodity spots, cryptocurrencies, and bonds. With that said, swing trading is not always optimal for CFD trading and forex trading. Since most online brokers apply overnight fees to positions that are opened outside of regular trading hours, you will be charged more to swing trade on these markets.

There are some people that swing trade CFDs and currencies and you could as well. Just remember to include all the additional fees when planning a trade. You should also be aware that swing trading poses some risk that other trading concepts do not. We go through these said risks in a section further down on this page. There are many different benefits to swing trading.

Instead, you can spend a couple of days analyzing the market, finding the right opportunity, open a few positions, and then only checking in on your trades every now and then. A day trader , on the other hand, will have to continuously analyze markets looking for opportunities to open and close new positions throughout the day.

Another benefit is that it is rather easy to apply reliable risk management techniques and tools to your swing trading efforts. Also, since you will keep your positions open for longer periods of time, the market movements will be greater than for a day trader. Therefore, you will not have the same need to use leverage and margin on your positions, thus, limiting the risk further. At the same time, the use of leverage and margin can be a huge benefit that allows you to multiply your profits.

For instance, if you want to open a position worth £10,, you can put in £5, of your own funds and £5, in leverage. However, the main benefit of swing trading is that you traders can use rather simple analytic methods. In fact, one can swing trade profitably and only rely on technical analysis for all the analytic work and planning.

In other words, there is no need to apply fundamental analysis to the stocks you trade. Naturally, you still need access to sophisticated charting tools and a reliable broker to perform at your best. As mentioned earlier, swing trading poses certain specific risks that other forms of trading do not. The first risk that comes to mind when talking about swing trading for beginners is overnight and weekend risk.

When keeping a position open aftermarket hours you run the risk of getting stuck in massive market reversals when the exchange opens again. As you probably already know, stocks and other instruments are known to experience the greatest market movements in connection with the market opening. When focusing on mid-length trading windows, you miss out on all the potentially profitable short market movements that day traders make use of. In turn, this results in lost profits and even substantial financial losses.

And the answer is quite simple. Swing trading and day trading share a lot of similarities and compared to long-term investments, they are very similar. What sets day trading and swing trading apart is the length of each trade, which, in turn, affects the way you analyze assets and plan your strategies.

When day trading , your goal is to benefit from many small market movements throughout the day. A position can be kept open for as short as a couple of minutes or even less than a minute.

This makes day trading perfect for volatile market conditions. Swing trading , on the other hand, focuses on longer market movements and each position can be kept open for several weeks on end. In many ways, these differences make swing trading easier than day trading. However, that does not mean that swing trading is easy or safe.

All forms of trading are associated with risk and swing trading is no exception. Therefore, you need to apply caution and ensure that you have the knowledge, funds, and tools needed to trade efficiently. We provide all the guides you need to maximize your efforts. The core of this site is also unbiased broker reviews aimed to help you choose the best broker for swing trading based on your specific needs and requirements.

Before taking a closer look at some of the proven swing trading strategies that you can use, we have to explain another thing that is unique to swing trading. Below, you can read more about three popular, trusted, and tested swing trading strategies aimed at beginners.

For more advanced trading strategies, please refer to our corresponding guides. There is an unwritten rule in stock trading that assets that have gained for a longer period of time, will continue to gain. Similarly, a stock that has been decreasing in value for a longer period of time, will likely continue to do so. Obviously, this is not always the case and sooner or later all instruments switch from being bull to bear and vice versa. Based on this rather vague concept, you can apply a basic swing trading strategy only based on market trends.

This is also a basic swing trading strategy that even beginners can make use of with satisfying results.

The concept revolves around the idea that you only want to trade stocks and other instruments that are trending upwards. And the best way to locate those instruments is to first locate the market sector that is outperforming all other sectors.

Then you have to locate the instruments within that sector that is driving the most of the upward trend. The idea of any trading strategy is to maximize profits and make trading easier. Also, if you implement good risk-management solutions, you can focus more of your time on the actual on-hand trading strategies.

Therefore, more so than being a great swing trading strategy for beginners, risk management should be a part of every trading strategy, regardless of your experience, budget or trading plan. Swing trading is a short-term trading strategy where a trader aims to profit from short to mid-level trading times. The average swing trading position is kept open for between 5 to 10 days, but they can be closed sooner or later than that.

Unlike day trading where you open and close several positions a day, swing trading allows you to open a position today and then not worry about it too much for a week or two. Compared to long-term investments, short term positions are much shorter. For example, a stock investor could buy a stock today with the intention to sell it with profit 2 years from now. Forex swing trading is exactly what it sounds like: swing trading forex currency pairs. In other words, it involves you opening a forex position today with the intention to close it and pocket the profit in a few days or weeks from now.

Please note that forex swing trading is not always optimal due to the overnight fees and potential overnight risks that the forex market is characterized by. Swing trading stocks is rather easy. Stocks also happen to be the most common instrument to trade using this strategy. Similar to all swing trading, your goal is to buy and sell stocks within short to mid-level time frames. To start swing trading stocks, you first have to learn how to analyze the market in search of opportunities.

This is easier said than done, and we recommend that you check out our stock trading guides for more information. is our leading content maker and head of the content department. For Adam, trading is not only a job but also a passion for more than 5 years. He has many years of experience in the financial sector and honestly admits that he is in love with his job.

You would not have time to sit and watch the markets every minute, every day. You can better manage your risk and protect potential profits through stop and limit orders, getting you out of the market at the price you set. Trailing stops are especially helpful as they trail your position at a specific distance as the market moves, helping you to protect profits, should the market reverse.

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Far too many traders are stuck to their computer screens trying to make a living every day. December 20, at am Reply. What are the best trading strategies? In terms of forex swing trading strategies , a good starting point is to focus exclusively on financial news. Trade oil, natural gas, or coffee stocks with TradingGuide expert team! Technical Analysis: Most swing trading strategies are based on technical, rather than fundamental analysis, which utilises a variety of charts and indicators to assess patterns. Any market has two main states: pronounced directional movement up or down the so-called trend movement and flat - sideways price movement.

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