Saturday, November 25, 2017

Forex Swing Trading Strategy Explained

February 28, 2010 by  
Filed under Fx Tutorial

Forex swing trading is one of my favourite trading method as it happens so frequently which gives all traders a lot of opportunity to trade it.

However there are times where the swings are more vigorous and this is when you can make more money from. Typically the forex market moves in waves and these waves are what is known as swings. You may be thinking that there are so many swings in a chart and is it possible to trade them all.

The answer is NO. If you take a close look at the swings, you will find that most of them do not move by a lot of pips. Therefore today I will be revealing to you the time that I often trade forex swing and it is also the time where there are bigger movement in price which makes it more profitable to trade.

small swing

big swing

First of all, let me go through the definition of swings for those of you who are new in this field. Basically a swing is made up of a V or N shape and it is actually formed by a reversal or retracement in price movement.

V-Shaped Swing

N-Shaped Swing

The best time to trade forex swing is during London Open and New York Open as these are the times that have the most violent swing.

Forex Indicators Required To Trade Forex Swing:

Here are How You Can Trade Forex Swing:

1) Time To Do Forex Technical Analysis: As the swing often occurs at London Open or New York Open, you should be doing your technical analysis 1 hour before the opening time. This can gives you ample time to analyze the time and figure out all the major supports and resistances.

2) Trend Line: To trade forex swing, you should be waiting for a trend line break to confirm the reversal or retracement of the price which makes up the swing. Take note that you should never enter your trade before a trend line break occur as you may be stopped out of your position if the price did not break the line but end up being repel by it.

3) Check Your Oscillator: This is the last step to check before you enter your trade. If you are looking to go LONG, you should check the oscillator to see if there are oversold and if you are looking to go SHORT, you should see if the oscillator is overbought. This can gives you additional chance of having a winning trade.

The above are how I trade forex swing and you can try them out to see if it works for you as well.

You can check out my other posts that show you how I trade forex breakout strategy as well as my forex scalping system.

Note to Readers:

Do note that the above strategy is a general fx strategy that has not been fine tuned. In order for you to trade with it, please fine it tune on a demo account. If you do not know how to fine tune a strategy, please read the below

For those of you who are totally new to forex trading, I will suggest that you read through this blog post that I have written for beginners

Click Here To Read The Post



14 Responses to “Forex Swing Trading Strategy Explained”
  1. noh says:

    some people using 4hrs, some using 1hr for better analysis..can i use 1hr time frame for this strategy?

    • Kelvin says:

      Hi Noh

      This strategy is applicable to all time frames, I have tried using this on 15 minutes chart and it works.

  2. noh says:

    what do you mean by “histrogram did not flip over”

    • Kelvin says:

      Hi Noh

      When you open your MACD indicator on your chart, you should see a histogram which is in the form of BARS. When it flips over, I mean that it moves from above to below the zero line or below to above the zero line.

  3. Juhari says:

    Kelvin, very useful and practical info. Thank you.

  4. Mohamed mukrin says:

    What about the parameters value to be set in macd histogram for 15 minutes to confirm the swing..

  5. Rockdrop says:

    Another interesting article. Your right about the large swings when New York or London trading times open.

    Thanks and more power!


    P.S. Rock drop is my favorite swing 😀

  6. chris says:

    How do i set my “stop loss” and “Take profit” targets using this swing trading strategy.
    As i work full time, i need a strategy that enables me to be able to place my trades without constantly watching the charts. Would i need to incorporate the fibonacci retracement and extension?

    • Kelvin says:

      Hi Chris

      For the setting of the stop loss, I will suggest you to place a stop loss of certain pips above the point where the price break below the trend line or at the most recent swing high whichever is lower. Depending on the volatility of the currency pair you are trading, the amount will vary. If you are trading the EURUSD which is not that volatile, you can simply place a stop loss of 25 pips above or below the point of breakout and if you are trading something that is more volatile like the GBPJPY, you need a stop loss of about 35 to 45 pips.

      As for the target profit, I usually take my profit at the next pivot level. Let’s say that I enter a short trade below the pivot point, I will take profit at the M2 or S1 level.

  7. ed says:

    What time frame you prefer to use with this strategy?

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