Swing Trading For Dummies Course 1: What Is Swing Trading?

Posted by Mangi Madang on August 23rd, 2012

Swing Trading,  what is it? What Is The difference between swing trading strategies and day trading strategies or scalping or trend trading strategies?

In here your questions will be answered.

But first

Wikipedia describes swing trading as a speculative trading activity in any financial market whereby instruments such as currencies are

bought or sold at or near the end of up or down price swings.

But that being saidif you are swing trading dummy:

• would you have a clue of what  price swings are?
• would you have a clue of what is an upswing or downswing?
• do you know what is a price rally or pullback? Do you know what they mean?

I bet you dont (or maybe youd know little).

So lets get into more detail, shall we? This is your introduction to swing trading.

WHAT IS SWING TRADING. WHAT ARE SWING TRADING STRATEGIES?

The forex market (or any other market) never stays stagnant, it moves. Its like when you inhale and exhale, how you see your tummy grow when you breathe in and tummy grows smaller when your breathe out. It a similar fashion, the forex market breathes and cycles and this is represented by up and down price movements you see on your forex charts.

• When the market is in an uptrend, prices will be increasing but even while the price is increasing, price will fall back again, then it will continue to rise up going past higher than where it fell from.
• In a similar manner, when the market is a downtrend, prices will be decreasing but there will be times when price will increase and then fall back down to go down further below where it rose from.

These two points above are keys to understanding what swing trading is.

Therefore swing trading strategies are trading strategies that try to capture these market moves or swings to allow you to become profitable.

WHAT DOES PRICE SWINGS IN AN UPTREND LOOK LIKE ON ON A FOREX CHART?

Well, see below

Just notice that this forex chart below, the market is in an uptrend and price is rising but during its rising, its also falling back down.

This falling back down is called the down swing.

And when price rises up again and forms a peak, that is called the upswing.