Swing Trading Time Frames

Swing trading means that your trade can run for several days as long as your profit targets are not met and the trend does not reverse itself. Swing traders believe in the saying, “Trend is your friend.” Most of the day traders end up being swing traders. A swing trader may have started as a day trader. Either they scaled out of a portion of the position, set a stop loss objective and kept the trade running as the market kept moving in the desired direction.

So, many day traders eventually end up being swing traders when they see the trend continuing and don’t won’t to let go the opportunity of riding the trend. A swing trader is also considered to be a mini position holder. Swing traders need to focus on higher degree time frames and spend less time on 5-15 minutes time frames regardless of how swing trading started.

5-15 minute time frame charts are for the day traders, most of who are scalping. 5-15 minutes charts will generate too many short term signals if you are a swing trader holding a position for a few days. The most reasonable time frames for a swing trader are the 60 minutes (hourly), 240 minutes (4 hourly) and the daily charts.

You should use pivot points in your trading. Using pivot points will give you an edge as a trader. Swing traders should give more attention to the daily, weekly and the monthly pivots as far as the pivot point trading is concerned. It helps them to be aware of the confluence of any support or resistance. This information will help them to identify potential entry or exit targets.

Whether you are a day trader or a swing trader, you are only interested in making profits from what moves the markets. You are not so much concerned with long term macroeconomic conditions as you are with riding a momentum wave when you are day trading. This is your job. The same is also true for swing trading. As a swing trader you are simply looking to ride from a move and profit from it.

Swing traders try to identify a potential trend and enter it at a time when most of the other traders have not yet identified it. You need to capture opportunities as they arise. In short term trading market conditions change! Forex markets are ideal for momentum trades. The forex market tends to trend well over the course of 3-10 days. This allows swing traders opportunity to capture larger price swings over a given period of time.

You have access to the forex market over the 24 hours period unlike the equity markets. Forex markets are open 25/5 except on weekends. Therefore, you can monitor your positions, place stops and take action to exit a trade at any time, day or night. This is the biggest advantage that forex markets have over stock markets.

The fact that the forex market is a 24 hour market and because of the time frame involving several days in swing trading, swing trading is slightly more advantageous in forex markets. Due this continuous market action there are very few time that gaps occur in the currency pair prices, this makes forex markets more suitable for swing trading as compared to the equity markets.

In swing trading the profit potential is much higher if you enter a trade when the trend has just been formed. Carry a day trade through the overnight session if it moves sharply in your favor and you believe that a trend is in the making that can last several days. However, do not carry your losing position to the next session. Try not to hold a position over the weekend. Your entry was correct if the trade starts making money in your favor from the let go.

Never get fancy and try to get a better fill by placing limit orders when you enter a bona fide trading signal. Go to the market before your competitors. Wait until the close of the period to confirm the signal. Never anticipate that a signal will happen.