Swing trading is very popular among Forex traders, as it is both dynamic and profitable. However, just like any other trading method out there, swing trading comes with its own ups and downs. Let’s discuss the specifics of this approach and find out which time frame is best for swing trading.
Swing Trading Definition
In order to succeed in Forex, each trader adopts a certain style and strategy. The strategic approach can be beneficial on several levels: it helps you to stay organized and clearly evaluate your resources and abilities. Swing trading is simply one of the strategy categories that a lot of traders find effective.
The swing trading definition is partially expressed in the name itself. Swing traders aim to profit off large changes in the price movement, that might appear as notable ‘waves’ on the chart. These waves are also called swings, and you can find them on virtually any chart. Simply: the elements between the most outstanding chart elements (the highest and the lowest) form a swing.
Now, your next question would be what exactly counts as a swing? Any move from top to bottom, or vice versa, no matter how insignificant? Well, this depends on your goals and expectations. As a rule of thumb, most traders who choose the swing approach are the ones who tend to hold their position open between two days and several weeks. Depending on the time frame they choose, the swings will appear differently. This brings us to the next question: what time frame is best for swing trading?
How to Decide Which Time Frame is the Best to Swing Trade
Of course, just as there no one foolproof strategy, there is no one best time frame for swing trading Forex. However, there are certain takes on this matter which you might find helpful. For example, the traders who are not too fond of holding their positions open overnight due to swaps might choose the daily time frame trading strategy. Through such a method, you can observe the swings that already occurred and build a forecast for the upcoming swing, by building a support and resistance corridor, for instance.
While the position traders, who come in for the long run can choose to evaluate the situation by a monthly chart. The higher time frame trading is a great way to observe a bigger, more generalized picture and, as a result, achieve higher profits.
As you can see, the best chart time frame for swing trading is pretty much that fits you and your preferences. But there is one approach that can help you benefit from several best time frames for swing trades at the same time.
Multiple Time Frame Trading
Switching between several time frames can be mighty helpful in both trend spotting and confirmation. That’s why, instead of asking which time frame chart is best for swing trading, you should try and find out what time frames you should combine in order to get the best results.
Basically, the principle of spotting swings will be the same: you take a larger scale frame and outline the big price fluctuations. However, you can take it to the next level and locate a precise, most optimal points of entry and exit by zooming into a smaller frame chart.
This means, that the best way to trading Forex daily time frame for swing strategies from earlier can be effectively improved by a 4-hour or a 2-hour chart. In trading lingo, the difference between the large scale and smaller scale charts can also be described as the ‘trend chart’ and the ‘trigger chart’. In simple words: you first see the general direction, and then you get closer to find out the exact details.
The best time frames for swing trading on Forex are very similar to the best time frame for swing trading stocks: you can benefit from any possible frame, but combining them is always a win-win. Of course, you might not be able to pick the exact right solution to the multiple time frame analysis from the first try, but as long as you are continuing to look for the perfect mix, you will get to it eventually.
So, there is not one single best chart for intraday trading, or swing trading, or any other strategy out there, to be fair. The best solution in trading is always the one that works best for you. Keep experimenting and trying new things, and you’ll be on the right path shortly.
