subject: Forex Swing Trading Strategy - Use This Simple Method For Big Regular Profits [print this page] If you want to make big gains in Forex and you also want to have an easy to understand and fun way to do it, there is no better way to make a great second income, than by using a swing trading strategy. Swing trading is simple to understand and apply so lets take a look at it in more detail.
The logic behind swing trading is simple - Humans made the price of any currency and at certain times the emotions of greed and fear will push prices to far to the upside or downside and these short and sharp price spikes (which you can see on any currency trading chart) don't last long and prices soon move back to more realistic levels. The swing trader, will look to sell into greed and buy into fear and try and make a quick profit, as the price spikes exhausts itself and turns back in the opposite direction.
The more a market becomes overbought or oversold the higher the odds are of a reversal but you need to know when to execute your trading signal when the odds are at there best and we will look at this now and put together a simple Forex swing trading strategy for big gains.
The first think to do is - to look for a potential opportunity and you simply need to look for a short term price spike up or down; on a currency trading chart. In the following example, we will look at trading an upward spike but the same logic, can also be used when a currency becomes oversold.
Watch for the price spike and then use some momentum oscillators to gauge the momentum of price - if prices are rising, momentum should be too. All you want to see on a currency chart, is the momentum oscillator overbought and wait for a turn down, this is called divergence and then you can trade short. Your stop goes behind resistance above the level you have enetered your trade at and then, you select a target and take profit, - so its very simple!
With momentum oscillators, the good news is just like charts, they show you a momentum visually and all you need to do is spot the set up. The best indicators to use for swing trading in my view are:
The stochastic, the MACD, RSI and the ADX indicators, just pick a couple you like and use them to confirm your trade.
While the above sounds very simple, it works and all the best Forex trading strategies are simple and robust, make your strategy to complex, with to many indicators and it will have too many elements to break.
Greed and fear, will always see traders push prices to far to the upside or downside and a Forex swing trading strategy which can trade these spikes, can make you a lot of money and generate you a great second income.
