Swing trading strategy focuses on holding trades for a longer time than scalp trading or day trading. Your trades can take more time to reach your target because, with swing style, the market will move slower.
Compared to scalp trading or day trading, with swing trading, you trade fewer trades. But you need to have stronger psychology because when you trade less, then your desire to trade more can be affecting your trading.
There are pros and cons of trading as a forex trader with swing trading style. And we will list in this article some of the things that you need to look for if you decide to be a swing trader.
Pros of Swing Trading
As we mentioned, when you swing trade, you don’t day trade because you have to wait more days so the trade can reach your target. But since you need to wait more time, there’s a positive factor that can affect your trading. when you trade financial instruments.
Holding trades for a long time can give you a more safe way to trade the market. The reason why, it’s because trades can move slowly, but you’re much safer from losses.
When we say it’s safer to trade, it doesn’t mean you will never lose. But the forex swing trading uses a higher timeframe on technical analysis to trade which is safer than scalp trading (scalp trader) or day trading (day trader).
And if you trade on the 4-hour timeframe or daily chart or weekly chart time frame for example, then you can spot more market patterns, apply trendlines. Another factor with forex swing trading is that support and resistance zones can become easier to trade.
During the higher timeframes, support and resistance can be major zones because of the time frame. The foreign exchange market can be unpredictable sometimes with technical analysis. But with swing trading, you can analyze the financial market in a compact style.
To trade the market with the swing style, you don’t have to start at charts many times. Also, your trades profit can be higher than scalp trading and improve your forex trading strategy.
Since you aim to reach more pips it can be riskier, but when you have success with trades, then the profit can be in hundreds of pips.
In overall, the benefits of forex swing trading are:
It’s safer to trade the forex market
You can earn more pips
You don’t need to look at charts often
Cons of Swing Trading
Besides the pros that we mentioned when you use the swing style, there are other cons that can affect your trading negatively.
Trades that you open take longer to reach as a day trader or scalp trader. And since you need to wait more time for trades to reach your target, the emotions and psychology can affect your trading.
The reason for that, it has to do with the number of trades and the desire to trade. As a new trader, you want to make more money because with only 1 or 2 trades per week it’s not enough. So to grow your account’s balance, you open more trades than can affect your risk management.
That’s where emotions and the “greed” can be decisive on your trades. The desire to trade more and make more money can result in opening trades without proper analysis and affecting your trading decisions.
It can also affect your trading plan, by breaking rules when emotions and your psychology can push you to make risky decisions.
Besides psychology like emotions, greed, etc, there are some other negative factors that can affect your trading.
For example, since you trade with swing style to make more money and gain more pips, there are consequences when your trade doesn’t go according to your analysis. As it can affect your forex swing trading strategy.
Since you use a wider stop loss because of the higher time frame, closing trades on losses can affect your account balance. The result of the closed trade on a loss can have a huge impact on the balance because of the high amount of pips lost.
In overall, some of the results that can affect you trading negative with swing trading are:
Your trades can take more time to reach your target
Your account need to have larger margin and balance
The psychology (emotions, greed) can affect your trading
Swing trading, day trading, or scalp trading are the different trading styles that you can choose to trade. We mentioned in this article why trading by using the swing style can be safer to trade and you don’t need to look at charts most of the day.
But we also mentioned the negative impact of swing trading such as psychology, account balance, etc.
To summarize the article, it’s up to you to decide if the swing trading forex style it’s for you or not. But we suggest you trade on a demo account if you’re new so you can see if the swing trading it’s working for you or not.