Swing trading forex is different than day trading forex. In day trading I recommend being more a specialist and only trading one, maybe two, pairs. With swing trading, our trades are more spread out, we can flip through lots of charts each night and not necessarily find a trade, so how many should we be looking through?
I can only tell you what I do. I flip through lots of charts, and I typically do it a few nights (if in US or similar time zones) a week, although you could do it every night if you want.
When to Look for Swing Trades
I like to look for swing trades after the US market closes, and before the European market open. For me, this is the evening/night, but for you it may not be depending on where you are. This window of time is typically a quiet period for most pairs. They consolidate and then when Europe opens they start making bigger moves again. I want to be in when those bigger moves happen.
If you have read my Forex Strategies Guide or watched my YouTube videos, you know that I like waiting for consolidations. This occurs when volatility drops off. Consolidations often occur between the last couple hours of the US session and the start of the European session. Therefore, placing trades which take advantage of breakouts from consolidations aligns with placing trades during this time.
If a currency has a big news announcement with the next 24 hours, I typically avoid placing trades in any pair involving that currency. The high impact news can cause abrupt trend changes and lots of slippage, so I prefer not to have trades out during major news.
What Forex Pairs to Swing Trade
There are lots of forex pairs that I look through. Going through this many pairs may seem daunting, but it doesn’t have to be. You can set up a chart for each pair in a simple trading platform like MetaTrader, and then quickly glance at each chart to see if it has a setup you trade. If it doesn’t, jump to the next chart. This will happen most of the time. If it looks like it could be setting up for a trade, take a closer look.
Typically, I can go through all these pairs in about 20 minutes a night. That’s because even though there are a lot of pairs, you may only get a couple of trades each night if you are only taking quality opportunities. Some nights there may be no new trades, and some nights there will be several.
If you are just starting out forex trading, start with the first column, as you don’t want to overwhelm yourself with too many charts to look at and too many trades.
Once you are comfortable with the first list, add the pairs in the second column. Once comfortable with those, add in the third column.
Once you get to the third column some of those pairs will be dramatically different than anything you have traded in the first two columns. Some of the pip values are way different, the spreads are bigger but so is the daily movement (and pip values smaller) so it balances out. It can be a bit intimidating at first. Be sure to look up the specifications of each pair, such as pip value, spread, and average daily volatility, before you start trading it.
By Cory Mitchell, CMT