If you want to make money in FX trading, you should consider swing trading. In this article we will look at some swing trading basics you can incorporate in your trading strategy for long term profits, let's take a look at currency swing trading in more detail.

If you want to make money in FX trading, you should consider swing trading. In this article we will look at some swing trading basics you can incorporate in your trading strategy for long term profits, let's take a look at currency swing trading in more detail.

Swing trading is exciting, fun and requires less discipline than long term trend following and this makes it great for novice traders. In swing trading you are simply looking to sell when the currency becomes overbought and buy it when it becomes oversold.

Short term price spikes either up or down, don't last long and reason for this is they are caused by the emotions of greed and fear, as humans push prices to far and then they come back to fair value. You will see currencies become overbought or oversold, all the time and the challenge is to make money from these spikes – now lets look at how to do this.

If you see a large price spike either up or down, look at some momentum indicators to see how overbought or oversold the market is. Good indicators to use are the stochastic, The RSI, the ADX and the MACD – There are many more but the above I find highly effective and consider the stochastic the best momentum indicator of all. Once the market is at an extreme look for a level of support and resistance which is firm and wait for it to hold and momentum to either wane or turn in the opposite direction to price. When you see momentum diverge from price you execute your trading signal.

You now need to set a target and this should be near the next level of support if you are short or the next level of resistance if you are long. Don't wait for a test of the level take your profit a bit before the test. Swing trading profits can quickly disappear so take your profit early. Currency swing trading is a “hit and run” - you are not looking to catch the exact top or bottom, if you get 60 – 70% of the move that's just fine and you will make a lot of profit.

Forex swing trading is very simple and the best strategies are simple – if you try and cram to many indicators into your trading system, it will be too complex and have to many elements to break. If you use just support and resistance and a couple of momentum indicators you can make money, so don't make your trading strategy more complicated than it needs to be.

The swing trading basics above, can help you put together a currency trading strategy which you can have confidence in and trade with discipline, so explore the art of swing trading and get on the road to trading success.