As we promised in the previous Forex 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 Forex Swing Trading strategy you can use to make pips in Forex trading.
Main article sections:
The best trading strategy for Forex 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.
We can use a FX swing trading structure to determine the trend but for a quick trend measurement, we use the Simple moving average in two ways:
- 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.
- If there are a zig-zag form and the price moves in a clear direction, that is considered a trend.
For this swing trading forex 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 Forex 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.