One of the most frustrating things you’ll encounter when you enter the world of investing — specifically, the world of forex trading — is that there’s always something new to learn. There’s always something that you need to understand before you can move to the next step of the problem, and if you don’t embrace these new concepts early on, you’re not going to really go very far. Thankfully, it’s quite easy to pick up on concepts over time, especially when you don’t pressure yourself one way or the other. Now is the time to learn the key basics and then build on that information. Over time, you will get exactly where you want to go within the world of forex.
So the first topic that we definitely had to address is swing trading. If you don’t know what swing trading is, this is definitely the guide you need to read.
You see, swing trading as it relates to forex means that you’re trying to catch the wave of a major trend and taking advantage of trades that are profitable. These trades are not long term — a few days to a week is the normal duration. So you’re trying to handle things in the short term which can be risky — but very profitable. A lot of people recommend swing trading because it really does allow you to get a lot of stuff done without a lot of hassle, because the system is so clearly understood. In fact, a lot of forex forums will assume that you know something about swing trading if you’re going to attempt it, so make sure that you keep reading!
Keep in mind that swing trading is not the same as currency day trading — you want to make sure that you are going off real valid data and not just running with volatility. Volatility in terms of pricing and movements can really mess up your analysis, which leads to missed opportunities to make your profits.
Support and resistance are going to be two concepts that you really need to understand as they relate to swing trading.
You will want to look at a trend and identity the moments of support as well as resistance, and then take the opposite view. This means that you execute a trading signal in the opposite direction.
Stop loss orders play well into swing trading — in fact, they are downright necessary. You want to always make sure that you place your stop levels behind the supp-ort or resistance level. Never assume that a trade is just going to take care of itself — you must always make sure that you are in control.