Swing Trading Blog - Opportunity For Swing Trading When Currencies Move Up or Down

Feb. 28, 2011 - PRLog -- Swing Trading Blog

Generally, when we trade forex, we can either trade the short term fast moves that characterise the volatility inherent in currencies, or we can trade the longer term swings.

Since our aim is to have a consistent income, there is a need to have a systematic way to trade forex so that we can glean our profits consistently and systematically.

If we look at trading systems today, we find that many forex traders day-trade and these day traders have their own favorite day trading systems. Another way to describe these traders is scalping. Indeed, many forex traders are able to make a living by scalping the markets, working a few hours a day from home.

If we look a bit deeper into what makes scalping possible, then we can discover that prices of a currency do have this characteristic of moving from a low point position to an upper point position, to form a trading range in a daily fashion. As long as prices oscillate within this range, the forex trader can actually scalp and make profits from buying at the low point and selling at the high point.

What is most interesting is that beyond the boundaries of the lower point and the upper point, the currency no longer displays its tendency to oscillate, but break out into a trend. If the price drops below the lower point position, it goes into a downtrend. If it goes above the upper point position, it goes into uptrend. It is no longer under a trading range where the forex trader scalps or actually is range-trading. Get Internet #1 - Swing Trading Blog @ http://tradingcure01.webs.com and be Successful forever!

It is times like these when the projected lower points positions and the upper point positions are breached and confirmed that trends are apparent, and swing trading comes into play.

For example, the US-Yen currency pair has been in a prolonged downtrend where selling positions could be taken over a period of 8 years to profit from the down swing. Day trading is no longer the focus.

Recognising when the currency pair has moved out of its trading range and has broken out into a confirmed trend is the key to swing trading.

Is the chart displaying a bottoming pattern configuration, with higher bottoms, and higher highs? Is there a double bottom or triple bottoms pattern, a V formation or a W formation in the chart pattern?

Is there slowing downwards price momentum? From the aspects of japanese candlestick, are there short term bottoming patterns such as a hammer, a tweezer bottom, a rising star, a piercing line or a bullish engulfing pattern to lend credence to your initial suspicions of a bottom and an initial upswing?

As forex traders, our objective is to be profitable whether we scalp or we swing trade. As markets trend only around 30% of the time, being able to identify the initial outbreaks of the swings and being able to trade them with our favorite swing trading systems will mean we can capture the sweetest part of the swing moves. While we range-trade 70% of the time, it is the big swing trades that can provide us with big profits. That's why we need a sound proven currency forex trading system for both range trading and swing trading if we are to profit from forex trading. Get Internet #1 - Swing Trading Blog @ http://tradingcure01.webs.com and be Successful forever!

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