Swing Trading

Swing trading is generally considered to be a medium-term form of trading financial instruments, such as commodities, currencies and shares.

The lengths of trades generally can last from a couple of days to a couple of weeks.

Technically speaking, swing trades are held for longer periods than in day trading, yet for shorter periods compared to position trading.

A large percentage of traders find that swing trading offers a happy medium.

This is due to investors not feeling pressured to close out trades before the day ends, nor needing to maintain their positions for months on end.

Swing trading is perhaps the purest form of technical trading, since it gives the trader the time to properly study charts and making clear decisions before entering, exiting or modifying a trade.

This is in contrast to scalping or intraday trading, which can often be susceptible to panic and instinct.

Inherent Risks of Swing Trading

While traders can apply swing trading techniques to virtually any currency pair, there are some pairs which historically at least, carry more importance when it comes to swing trading.

It’s of no great surprise that these involve the major pairs, i.e. those involved with the US dollar.

Like any other form of trading, swing trading does carry an inherent level of risk associated with it.

For example, swing trading carries the usual risk of loss as seen in any type of speculative strategy.

Furthermore, swing trading risk typically increases in a trading range, or sideways price movement, relative to a bull market or bear market that is clearly moving in a specific direction.