Even though you are a forex beginner, you may have heard of forex and crypto swing trading strategy.
Sometimes a beginner feels bored with day trading or scalping strategies and wants to find other alternatives that are more relaxed and profitable.
To answer the question, you can try swing trading strategies, by utilizing the best timeframes to find the best swings.
In this article, I will write and describe the ins and outs of a swing trading strategy, which may be of interest to you, please continue to read the article until the end.
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Swing trading explained
In simple terms, a swing trading strategy is a trading method by looking for swings that occur in the forex market which has a wide range of price swings.
More precisely, it is a trading strategy by looking for points of reversal to determine whether to buy or sell a currency pair.
By identifying the right time for a price reversal, it is hoped that the trader will get the maximum profit. Therefore, to find that goal, you need to choose a pair that has a wide range of price movements.
Although basically, all pairs are able to apply a swing trading strategy, for the effectiveness of obtaining profit, choosing a pair with a wide range is more important, making it easier to get higher profits.
Advantage swing trading strategy
Swing trading is a trading method that is not as aggressive as scalping or day trading. Because in swing trading, traders only open and close one position for several days.
Unlike scalping, the transactions may run hundreds of times for aggressive traders. In terms of the advantages, swing trading is more relaxed, not always in front of the chart because it has a wider profit target.
This reduces the level of psychological stress when trading. However, besides its advantages, swing trading requires more capital, because, with a wide target, the stop loss distance is also balanced according to the risk-reward ratio.
How to do swing trading
The forex swing trading strategy will usually look for pairs that have a high daily average, for example in very liquid currency pairs such as GBP/USD, EUR/USD, and USD/JPY, or cross pair like as GBP/JPY, EUR/JPY.
When trading, a trader simply buys and sets a target profit limit with a further limit. Determination of the profit target on swing trading is usually greater than the day trading target so it takes several days to weeks for the price to touch the target.
Swing trading strategy example
Actually, there are various kinds of swing trading systems, either with indicator tools or with price action.
Here what needs to be considered is the price range and trend direction. Understanding this condition can minimize the noise that occurs so that determining the reversal point becomes more accurate.
Swing trading flat range market
When prices move flat in a range, prices usually form support and resistance, which if we draw a trend line it will form a horizontal line.
The example image above shows the price trend moving within the support and resistance ranges which are marked by horizontal lines both on the support side and on the resistance side.
How to trade
How to trade swing in this condition is very simple, we only need to wait for the price to approach the horizontal line to determine the entry point.
Open buy if the price is at the support line and open sell if the price is at the resistance line. However, you should wait for candlestick confirmation, because the price dynamics allow for a breakout.
Swing trading in a downtrend market
A downtrend market is a trend condition where the price tends to go downward, forming a high that is lower than the previous high.
The picture above is an example of a market downtrend. In this condition, the recommended position is to sell or go short.
It is not recommended to open long positions because in general at that time it is a downward trend so if you open buy or go long it will oppose the trend which as a result may be position will be dragged.
How to trade
A simple way to swing trading in downtrend conditions is to draw a trend line in the resistance zone by pulling from the higher high to the higher low.
For entry points, it is recommended that traders wait for the price to be on the trend line. But need to wait for confirmation of the reversal candlestick, to avoid a breakout.
Swing trading in an uptrend market
If you understand the basic concept of swing trading for a downtrend, then an uptrend is just the opposite of a downtrend.
All you need to do is draw a trend line on the support by drawing a trend line from lower low to lower high.
How to trading is only looking for long positions, waiting for the price to close at the trend line, and waiting for the confirmation of the reversal candlestick to avoid possibly breakout.
How does swing trading works
The way swing trading works is to look for price reversal impulses to find opportunities for price swings in a wide range.
Usually, traders not use low timeframes like 15 or 30 minutes. But more likely to choose a high timeframe at least H1 to daily.
However, to find a more detailed swing, using the H4 timeframe is good enough to reduce the noise of price movements.
What is the best time frame for swing trading?
In the Metatrader 4 platform, there are 9 different timeframes available from M1, M5, M15, M30, H1, H4, D1, W1, and MN.
In one timeframe it represents price movements from Open, High, Low, and Close, so for example M1 represents the OHLC price movement in one minute.
So if you open this timeframe the price movement looks aggressive. This often gives analysis noise for swing trading so it is not suitable.
M5 is not much different from M1, including M15, which is more widely used by scalper traders. While the M30 is rarely used by traders.
H1 is quite good for finding daily swings, but swing traders mostly use a minimum of H4 for short-term analysis and D1 for long-term analysis. It is possible to pay attention to W1 and MN for mapping the range of long-term movements.
Swing trading advanced 55 ema strategy
The exponential moving average can also be used for swing trading forex and crypto strategies.
The tools used are EMA 55 and EMA 33 by selecting the H4 timeframe as the basis for analysis in determining the entry point.
The basic strategy of using two EMAs is to wait for the cross of the low EMA to the high EMA.
In a swing trading strategy using two EMAs, the 55 EMA can act as a flexible support and resistance line.
Basically, the moving average indicator is used to determine the direction of the ongoing trend. In applying EMA 55 and EMA 33 in the advanced swing trading strategy of EMA 55, traders can take advantage of the crossover that occurs between EMA 33 on EMA 55.
How to trade is to wait for the intersection of two EMAs, if EMA 33 crosses EMA 55 from below then open Buy. Conversely, if it crosses from above, open sell.
Another way is to make the EMA 55 a flexible support and resistance line.
If the direction of the EMA line tends to be ascending, traders are waiting for the price to bounce off the 55 EMA line to trigger the opening of a new position, to buy.
Conversely, if the EMA 55 points to descending, traders are waiting for the price to bounce off the 55 EMA line to open sell.
Stop losses are placed above or below the swing, and targets can be made with a cut profit or at least two stop losses.
Swing trading strategy bitcoin
Swing trading can also be applied to the cryptocurrency market. In Bitcoin trading, traders can choose crypto to crypto or crypto to fiat currency pair.
This study is trading on BTCUSD which is a crypto to flat currency pair. The classic reason for choosing this pair is that the value of Bitcoin is always tied to USD. So most brokers offering crypto accounts have this pair available.
Identify the trend
As the first step to Bitcoin trading is to identify the major trends. In this sample, I use the H4 timeframe as the timeframe that is commonly used for swing trading.
Chart image Tradingview
In the image above I started to draw a trendline, which is where the market trend is bullish.
The trend line can serve as a support area, and in theory, it would be more profitable if the trader waited for the price to bounce closer to the trend line before opening a long position.
Entry point
The best entry point is to wait for the price to bounce off the trend line, but it may be that the price will continue to rise in a few days due to market sentiment. Plus the news about Tesla that will accept Bitcoin for the purchase of their luxury car.
Technically, this issue could trigger the Bitcoin price to rise again without forming too many long down waves.
If you may decide to open long before the price bounces off the trend line, you can try identifying price action.
After a long period of bullish weakness, a bear’s candle appeared which was followed by a consolidation pattern, from a line of four candles moving in a range.
You can place a position in the range of the consolidation by waiting for the price to be in the bottom area. Place stop losses at a distance according to your risk management under consolidation support.
Can swing trading make you rich?
This question has a relative answer. Any trading strategy can make a trader rich, but it can also lead to bankruptcy. The skill factor, how to manage capital, market conditions will affect the final result of a trade.
Swing trading is opening a position with a wide target and usually takes several days to reach the target.
Swing trading strategy when a trader is able to understand the average movement of a currency pair, can determine the best entry and get more profit, then maybe he or she will become rich.
But the definition of rich for most people is those who have billions of dollars, property assets everywhere, super luxury vehicles.
But the definition of rich from the subconscious is those who always feel that all their needs are fulfilled. It doesn’t matter that their money is only thousands of dollars, if all the needs are fulfilled and he is happy in his life then that is a rich man.
Is swing trading profitable?
Swing trading is profitable when studied with great patience, it doesn’t matter to have only one trading position, as long as in the end the profit is better than having dozens of transactions but many losing positions.
Often traders’ loss cases start from their impatience in waiting for the best momentum and price. The feeling of fear of missing out is often a disease of traders, while market trends have passed away.
How much money do I need to start swing trading?
In fact, the amount of capital is not the basis for a trader to get a bigger profit.
First, a trader must be able to measure his own abilities, not because the theory uses large capital, the results are large.
Once you suffer a loss in trading, money cannot be returned. However, if proven skills are able to make money, a large amount of capital can provide maximum profit.
Suggestion to start Swing trading strategy with $1000 at least. Meanwhile, another opinion talked to start with $2000 on the most.
Swing trading as a part-time job
A swing trading strategy is one that is suitable for part-time traders. Because traders don’t have to be in front of the monitor all the time.
He may leave the platform chart and check again later. The trader can continue the main business after he has set a stop loss.
What is the best swing trading strategy?
The best swing trading can be divided into three groups of market trends. When the market trend is in a bullish position. The best strategy is to wait for the trend reversal.
While in a flat position, swing traders try to take entry in the support and resistance zones within the range. The third is swing trading with a breakout system. Where traders will wait when the support and resistance zones are breakout.
Final thought
For traders who like strategies that involve a small of emotion. Swing trading is a good alternative that can be applied to the forex and crypto trading markets.
The main reason for swing trading is the comfortable strategy because the trader only opens one position for several days. The smaller the order quantity, the lower the emotion it can control.
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