While swing trading can be used on any market, the information and examples on this site will be confined to forex swing trading. There is no reason you can’t use what you discover here to swing trade stocks, bonds, precious metals or any other kind of market.
For swing trading to be effective, you must trade a market that is:
- Actively traded
- Has a tendency to trend
These two traits are essential for a swing trader to be able to ride the waves as price pivots or moves from one level to another.
There are a vast number of currency pairs on the forex market that can be traded, but the most suitable for swing trading is the EUR/USD. This currency pair is recommended as it is heavily traded making it very liquid and because it exhibits a good level of trendiness. Price typically swings back and forward from one price level to another.
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In the above screenshot of the EUR/USD, you can see the swings or waves of price movement. The price movement is very steady and smooth flowing. The EUR/USD tends to trend well in one direction with smooth price action. Regardless of the market you want to swing trade, the price action should be smooth with price moving in an almost wave like patterns.
Click to enlarge
The above screenshot is an example of market that would be difficult to swing trade. The price movement is erratic, with almost no warning of the direction it is about to move in. Price does not move in waves and instead jerks and jumps around in an almost sideways fashion before blasting off in one direction.
Does this mean you can’t trade other currency pairs? Of course not. However, if you are just starting out I would strongly recommend sticking to the EUR/USD until you are experienced and have a greater understanding and feel for swing trading.
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