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Swing Trading: What It Is, How It Works & Why Forex Traders Love It?

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As swing trading becomes a more popular strategy in the forex market, it's important to learn more about what it's all about. Here's a look at how swing trading works on a basic level.

Every day, traders use a wide range of strategies in the forex market. Each has pros and cons, but some strategies have a better track record of getting results than others.

This is because most fundamental traders (also called fundamentalists) are swing traders who make moves based on fundamentals, often taking several days or longer to cause enough price changes to make a profit. If you want to know more about these trades, Valiant Markets is the best option for you.

As swing trading becomes a more popular strategy in the forex market, it's important to learn more about what it's all about. Here's a look at how swing trading works on a basic level.

What Is Trading in Swings?

Swing trading is a short-term strategy that buys or sells a currency with the help of technical indicators that show a price change is coming. This trend can last anywhere from a few days to a few weeks. Swing traders put a lot of weight on technical analysis to keep an eye on a currency and figure out when a "swing" is likely to happen. When a trader does swing trading, they usually don't care about the long-term value of a currency. Instead, they try to make money from peaks and valleys in momentum.

Look at how the value of the NZD/USD shot up from its lowest point on September 2 to its highest point on September 6. Even though the currency pair has been going down for months, its quick four-day rise is exactly the kind of movement swing traders want to see.

Before the price breaks out, you'll also see a short consolidation period; a common sign traders use to predict a swing opportunity. In this case, it's not about how much a pair will be worth in the long run. Instead, it's about how likely it is to change quickly in the near future.

Pros of Trading In "Swings"

On paper, swing trading seems like a good idea, but no one can deny that it's a risky way to trade. But with risk comes reward. Valiant Markets can help you. Swing trading has a number of key benefits that could make it a better way to trade than other popular methods.

Changes in trading times

With many trading strategies, you're in it for the long haul, long positions, and long-term commitments. Swing trading is a different trade method that gives traders much freedom. Since you don't want to hold anything for a long time and instead make money from price swings, you have a lot of trading freedom. You could switch between sessions, or you could trade during the day.

Smaller stop-losses

In swing trading, your stop-loss is small compared to trades that last longer. For example, the stop loss on a swing trade based on a typical four-hour chart could be 100 pips, but the stop loss on an overall position based on a weekly chart could be 400 pips.

With this in mind, swing trading lets you choose large positions instead of those with low leverage that are common in longer-term trends.

Conclusion

Some traders do well with a long-term view, but others want to find more daily trading opportunities. This is possible with swing trading because you watch how the market moves instead of just sitting back and waiting for things to go your way.