Swing Trader ~ forex trading hours new york
Swing trader measures an ideal holding period for many participants as 3 days, the the preferred time frame is 4H.
Depending on the currency pair, the profit potential per trade for swing traders can range from 50 pips to 150 pips or more.
Swing traders tend to be a bit more conservative than scalpers or day traders; they typically wait for several confi rmation signals before triggering a trade.
The tools preferred that uses a swing trader are: Bollinger Bands, Fibonacci retracements, and
trendline channels to all chart views. For example, when both daily and weekly Bollinger Bands converge at a single breakout number, odds increase that price will reverse
right at that level.
At the same time, swing traders are not bothered by intraday volatility and price swings because they are more concerned with catching the medium-term trends. Profit targets and stop-loss levels are naturally larger for swing traders because they have a slightly longer-term view than day traders.
Since trades usually have larger targets, spreads won ’t have as much of an impact to overall profi ts for swing traders. As a result, trading pairs with larger spreads and lower liquidity is acceptable.
Swing trading offers these top three advantages:
1. Favorable risk to reward. Swing traders normally are not concerned with intraday movements of the market because they have a slightly longer time horizon in watching the markets.
As their time horizon is longer than that of day traders, swing traders normally set favorable risk to reward ratios of 1:2, 1:3, or more.
If the stop loss is set at 50 pips, the profi t target is normally 100 pips, 150 pips, or more.
2. Save time. Swing traders are mostly technical traders, which means they do not have to spend time every day to keep abreast of fi nancial news.
This is not to say that news is not important, but due to the swing trader’s trading style of exiting positions in two to fi ve days, daily news events don ’t matter much. This is one of the biggest draws of swing trading and makes the method perfect for new traders or part-time traders who have full-time jobs.
3. Hassle-free. Many traders feel the need to meddle with ongoing trades or to trigger unnecessary ones. This normally happens when traders trade several times a day. As swing traders depend on a trading plan to trigger long and short positions, they do not fall into this trap. In fact, swing traders thrive on following a structured plan. Following a plan keeps human error to a minimum and enables swing traders to avoid emotional trading.
Swing Trader Rules
Medium-Term Range Trade
Rules
1. Use daily charts.
2. There are two ways to range trade in the medium term: position for up-
coming range trading opportunities or get involved in existing ranges:
Upcoming range opportunities: Look for high-volatility environments,
where short-term implied volatilities are significantly higher than
longer-termvolatilities;seekreversionbacktothemeanenvironments.
Existing ranges: Use Bollinger bands to identify existing ranges.
3. Look for reversals in oscillators such as RSI and stochastics.
4. Make sure ADX is below 25 and ideally falling.
5. Look for medium-term risk reversals near choice.
6. Confirm with price action—failure at key range resistances and
bounces on key range supports (using traditional technical indicators).
Indicators Options, Bollinger bands, stochastics, MACD, RSI, Fibonacci retracement levels.
Medium-Term Trend Trade
Rules
1. Look for developing trend on daily charts and use weekly charts for confirmation.
2. Refer back to the characteristics of a trending environment—look for those parameters to be met.
3. Buy breakout/retracement scenarios on key Fibonacci levels or moving averages.
4. Look for no major resistance levels in front of trade.
5. Look for candlestick pattern confirmation.
6. Look for moving average confluence to be on same side of trade.
7. Enter on a break of significant high or low.
8. The ideal is to wait for volatilities to contract before getting in.
9. Look for fundamentals to also be supportive of trade—growth and interest rates. You want to see a string of economic surprises or disappointments, depending on directional bias.
Indicators ADX, parabolic stop and reversal (SAR), RSI, Ichimoku clouds (a Japanese formation), Elliott waves, Fibonacci.
Medium-Term Breakout Trade
Rules
1. Use daily charts.
2. Look for contraction in short-term volatility to a point where it is sharply below long-term volatility.
3. Use pivot points to determine whether a break is a true break or a false break.
4. Look for moving average confluences to be supportive of trade.
Indicators Bollinger bands, moving averages, Fibonacci.
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Swing Trader ~ forex trading hours new york:
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Trade the break works with the 15-minute (M15) or 30-minute (M30) candle.
The stop loss is placed above the midpoint of the prior range because we do not expect prices to rise above that point.
4. Set the stop loss at the 60% mark of the range (distance between the support and resistance) below the resistance. In this example, the dis- tance between the support and resistance is 41 pips; the stop loss is set at 25 pips below the resistance.
Set two profit targets for this trade. The targets are set at a risk to reward ratio of 1:1 and 1:2 respectively. Since the stop loss is 44 pips (distance between the EP and the SL), the first profit target will be 44 pips, and the second profit target will be 88 pips. (se picture)
