Forex swing trading is a simple to understand yet powerful way to make big gains trading currencies in around 30 minutes per day. Not only is it a great way to make money its also very easy to learn so – lets look at how to make a great second income swing trading.
The logic of swing trading is easy to understand and is routed in human nature. Humans tend to push prices to far up or down and this can be seen on a Forex chart in terms of a short sharp price spike. The price spikes up, as greed pushes to far and then quickly reverses and comes back to a more realistic level of value.
You aim as a swing trader is to sell into these price spikes and make a quick profit when prices reverse. A swing trade will normally last a day to a week and the risk to reward on these trades is excellent if you time your trading signal correctly, so lets look at how to do this and outline some simple steps you can follow to make money swing trading.
– First you need to look for an accelerated price move to the upside. Once you see this occur you need to get ready to time your move.
– To time your move you need to know EXACTLY how overbought the market has become and to do this, you will need some momentum oscillators. There are many of these and if you look at them, they will tell you if the market is overbought and how overbought it actually has become. The best indicators to use in my view are – The ADX, MACD, Stochastic and Relative strength Index. Use just use a couple you like to confirm your trade. They don’t take long to learn and you can tell at a glance how overbought the market is.
– When the indicator shows a market is overbought, simply watch it and wait for it to turn to the downside, while prices are still rising.
Once this happens, its time to put your trading signal in the market.
– Place your stop above resistance and pick a downside target which should be just above support – as soon as your level is hit you get out and wait for the next opportunity.
– When swing trading always keep in mind the old phrase ” the bigger they are, the harder they fall” which is swing trading terms means the bigger the spike and the more overbought the currency becomes, the bigger the profit potential will be when it falls. Always try and trade currencies that are not just overbought but very overbought and near chart extremes, to maximize your risk to reward.
So there you have a very simple strategy, you can learn quickly which is easy to understand and best of all, makes big Forex gains in around 30 minutes a day.