Forex Swing Trading - Swinging from One Analysis to Another

While swing trading may sound like some wild, brave, Tarzan-like trading strategy with a lot of bold and gutsy moves, Forex swing trading is actually much more refined strategy than that. Swing trading is a style of Forex trading used by traders who don’t just want to use either technical or fundamental analysis, but who use a blend of both for optimal Forex trading results.

In swing trading, specific technical analysis is used to make the decisions on which trades to perform, while the fundamental analysis is used to make sure that all the basic “cues” that are given by the technical analysis match up with economic reports and other fundamental indicators that would affect the currency pair you’re looking to trade.

Because of this, swing trades are longer term Forex trades, looking for larger profits from currency pairs where the technical and fundamental both line up to give a positive report. Most swing trades will last longer than a day, and some can even last several days depending how the market reacts.

This is a little bit of an over simplification in explaining what exactly Forex swing trading is, but it gets the basic point across. Swing trading tends to sit in the middle area somewhere between day trading strategy and trend trading strategy. Because of the blend of analysis types used, many Forex traders really like Forex swing trading.

A day trader will hold a currency for the short term, looking for a quick market movement to provide profit, and then get out. A long term fundamental trader will hold for a long period of time, expecting a result from larger fundamental signs about where a market will eventually trend. In theory, swing trading helps give you the benefits of both in one strategy.

A swing trader trades right between these two extremes. Swing traders will hold their currency pair for a day or up to a week and trade it based on the currency pair’s movement between the highs and lows over longer periods of time, almost always longer than a day and sometimes far longer.

There is a lot of money to be made in this middle ground area, and swing traders are confident that will other traders really go for the long haul, or keep dodging in and out of the market like water bugs, that this middle of the road Forex trading will provide the best long range profits.

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