The Swing Trading Forex Strategy
Swing trading is all about identifying forex currency positions suggesting that a trend may end, and a new one may begin. A swing trading strategy differs from others in that it can span as long as two weeks. As such, the strategy requires an investor to be patient, remaining optimistic in the hope that the strategy will work. However, this is not the only factor to keep in mind when adopting a swing trading strategy. The strategy involves multiple stages, where investors are required to buy or move particular sums of currency. As such, swing traders will need to understand the important nitty-gritties of risk management.
The theory of gaps is a branch of Forex technical analysis commonly employed by traders all across the world. Gaps are generally identified as places on a currency chart where the price or rate of a currency has moved significantly without many trade flows in between. In some cases, these gaps can come about even when no trading has taken place. The term 'gap' is used because it implies a diversion from existing price patterns. An intelligent trader will be able to understand how these gaps come about and take advantage of the opportunities they present. Let us take a look at how these gaps take place and their implications to the Forex market and the trader.
One of the factors that forex traders have to be aware of when they trade is system downtime. Not only should they be aware, but they should be prepared to handle any kind of technical issues that can result in losses for them. The forex market moves fast and the leverage is high, so a trader should have backup resources that enable uninterrupted trading.
The trend may be your friend, but the countertrend is not your enemy. It’s just more “prickly” and difficult to get close to. Almost every forex trading “expert” and just about all the blogs out there warn against bucking the trend. “Trade with the trend, or you will get burned,” is what they usually say. On the other hand, some of the most famous and successful traders were those whom did not and do not follow the herd. When markets were trending in a certain direction, these types of traders were looking for the exits or were selling when others were still buying. These traders blaze their own path, usually in contradiction to established rules and precepts.
When University of Essex in the United Kingdom offered a Masters degree on High Frequency Finance and Trading, the academic community stared with a glimpse of obnoxiousness. High-Frequency-Trading or HFT is a method of using complicated computer aided algorithm based trading that opens and closes orders within milliseconds to gain profits. Hence the term high frequency.