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A Swing Trading System for Beginners

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As we promised in the previous Swing Trading article (link), it is time to put everything on paper and start making some money. In this article we will show you a Swing Trading strategy you can use to make pips in trading.

Main article sections:

The best trading strategy for beginners relies on a market that is trending. There are swing trading strategies for non-trending markets but for this one, we want to take a trade that might be a larger potential swing trade.

Why using a swing trading?

We can use a swing trading structure to determine the trend but for a quick trend measurement, we use the Simple moving average in two ways:

  1. If the price movement is going back and forth, up and down through the moving average, we will consider that to be a range-bound market.
  2. If there are a zig-zag form and the price moves in a clear direction, that is considered a trend.

For this swing trading price action system, we will use a very simple determination for the trend direction and that will come via the relationship between price and the moving average.

  • when the price is above the 21 sma, the market is in an uptrend
  • when the price is below the 21 sma, the market is in a downtrend

The slope is also important. We want to see a clear slope. If the SMA is pointing upwards, the trend is bullish. If the SMA is pointing downwards, the trend is bearish.

The RSI settings should be set to 10 and we use the 50 level for the swing strategy. The purpose of the RSI in this trading strategy is to confirm the strength of the trend. You might be asking - what is the best time frame for swing trading? The answer is the 4h time frame. We swing trade on the 4h time frame.

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The swing strategy for beginners

Time frame: 4h

Pairs: All pairs - Beginners should focus on EUR/USD, GBP/USD, USD/CHF and AUD/USD

Buy trades:

  1. The price has to be above the 21 SMA.
  2. Wait for price to pullback down and touch the 21 SMA line, go slightly below it or come VERY close to it.
  3. Once the 21 SMA line is touched, see if the 10 day RSI has bottomed below the 50 RSI level and has started to make a hook up.
  4. The RSI needs to go above 50.
  5. Place a buy stop order above the high of the candlestick (after it closes). This candlestick should coincide with the RSI starting to turn up.
  6. Place your stop loss at 5 pips + the spread below the low of that candlestick.
  7. Your target price is 2-3 times what you risked.

Sell trades:

  1. The price has to be above the 21 SMA.
  2. Wait for price to pullback up and touch the 21 SMA line, go slightly above it or come VERY close to it.
  3. Once the 21 SMA line is touched, see if the 10 day RSI has spiked above 50 RSI level and has started to make a hook down.
  4. The RSI needs to go below 50.
  5. Place a buy stop order above the high of the candlestick (after it closes). This candlestick should coincide with the RSI starting to turn up.
  6. Place your stop loss at 5 pips + the spread above the high of that candlestick.
  7. Your target price is 2-3 times what you risked.

Buy trade example:

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Sell trade example:

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If you want to successfully swing trade it may be useful to open a demo account first. Once you master this Swing strategy for beginners you might be able to make real money in the market. In case you still lack confidence in trading, you can also profit from the Copy Trading service:

Stay tuned! Follow the updates in our Education section.

- How to identify Scams

- The Most Successful Traders

- How to Read Charts

This material does not contain and should not be construed as containing investment advice, investment recommendations, an offer of or solicitation for any transactions in financial instruments. Before making any investment decisions, you should seek advice from independent financial advisors to ensure you understand the risks.