I’m starting to get interested in [B]Swing Trading Forex[/B], and want to learn everything what there is to know, to be consistent in about 1 year time. (still setting up my strategy, and going to start with demo pretty soon).
Here is what I know:
I want to focus mainly on Price Action (strategy that requires Support/Resistance, and trading based on reversals exclusively, which seems a bit safer than breakouts).
I want to trade after my day job. I’m from Europe.
Is it profitable to only trade in the evening?[B] In other words, is there a Swing Trading Strategy, or book that consists of trading the New York last couple of hours and close and the Sydney Open time. Is there a lot of action at this time?
[/B]
I want to make consistently about 2% per week. Is this a realistic goal (concerning that I don’t want to risk more than 1% per trade, and a risk/reward ratio of 1/2). Trading about 30 min-1 hour per day.
If anybody can recommend me some good books about PA Swing trading Forex that would be much appreciated. Also any other tips are welcome!
Over the past 3 years, or so, I have made the transition from day-trader to swing trader, so I think I can address your questions.
Swing trading, as I use the term, is essentially a [I]trend-following trading style.[/I] I don’t think of it in terms of reversals or breakouts (as you described it, above).
Swing traders generally don’t try to catch tops and bottoms. So, we aren’t trading [I]reversals.[/I] Instead, we try to identify (1) a new trend which has formed [I]after a reversal,[/I] or (2) the resumption of an existing trend [I]after a pull-back[/I]. Identifying these things earlier, rather than later, is one of the keys to success as a swing trader.
Just to be sure we are talking about the same trading style, let me give you my description of swing trading —
Just about [I]any[/I] price movement from a [I]low[/I] to a [I]high[/I] (or vice versa) can be referred to as a [I]price swing.[/I] There are price swings that begin and end in minutes; others begin and end over a period of hours, or days, or weeks, or months. The price swings that swing traders look for are typically [I]multi-day price swings[/I] — and the more days, the better. Price swings lasting a couple of weeks, or longer, are great for swing trading.
When a swing trader enters a trade, the intention is to enter in the direction of the trend, and hold the trade for several days — but there is no guarantee that this will happen. Changing circumstances can make it necessary to exit a trade early, essentially turning it into a day-trade, or even a scalp. (A very successful trader I know says that every trade [I]starts out[/I] as a scalp, and only matures into a longer-term trade if conditions are right.)
Changing circumstances can turn a swing trade into a [I]position trade,[/I] as well, and these are the big-money trades for a swing trader who has the knowledge and guts to hang on for the long ride.
If all of that describes the sort of trading you want to do, then the rest of my answers (below) will probably make sense to you.
The time period you have described is ideal for swing trading, [I]precisely because there is not a lot of market action[/I] at that time of day. The lowest volume period of the trading day is the hour between 5pm and 6pm New York time (that would be 11pm-midnight in central Europe).
During the last couple hours of the New York session (which you mentioned) — that is, 3pm-5pm New York time — there is [I]sometimes[/I] a flurry of market activity, as some players unwind positions they don’t want to hold overnight. More typically, though, market activity begins to slow down after the London close (12pm noon New York time, 6pm central European time), and grinds almost to a halt by about 5pm New York time.
If you swing-trade the markets the way I described above, I think you will find that you can do your analysis, and find the set-ups you are looking for, with the least mental pressure and the most mental clarity during the slowest time of day.
Two-percent per week is very realistic [I]for a good trader.[/I] Are you a good trader? Obviously, not yet. Will you become a good trader? That remains to be seen.
Think hard about the question you asked. It’s a little bit like a guy who is just learning how to play soccer (football, for you guys in Europe) saying, “I want to become a professional soccer player, and I want to earn a world-class income. Do you think my goal is realistic?”
Find a copy of Kathy Lien’s book [I]Day Trading and Swing Trading the Currency Market,[/I] 2nd edition, published in the U.S. by John Wiley and Sons, in 2009. You might be able to find a free .pdf version online.
As for other tips, take a look at 301 Moved Permanently here on the forum. Don’t try to read the entire 3 Ducks thread — it’s been running (actively) for 8 years, and it contains almost 2,500 posts. Read the first few pages to get a feel for what it’s about.
If the style of trading described there is something you want to look into, then request the free e-book offered by the originator of that thread, Andy Perry (aka Captain Currency). Somewhere in the first 20 pages, or so, you will find instructions for requesting the e-book.
The 3 Ducks Trading System is presented as a day-trading methodology. But, as a classic triple-screen methodology, it is easily adaptable to swing trading. I use it to swing-trade the longer time-frame charts, and it works very effectively.
I didn’t mean to write a wall-of-text, but I hope that I’ve answered your questions.
I’m sorry you had to wait so long for a reply to your post.
“The 3 Ducks Trading System is presented as a day-trading methodology. But, as a classic triple-screen methodology, it is easily adaptable to swing trading. I use it to swing-trade the longer time-frame charts, and it works very effectively.”
Hi Clint,
I am relatively new to FX trading and just getting started with trading a demo. I work full-time, so I have been looking for swing trade strategies to allow trading without having to sit in front of the computer for 10 hours a day. That is why this thread caught my attention. I have noticed your posts in other forums (The Most Profitable Strategy You Will Encounter) and your knowledge and responses seem solid.
If I can ask, how did you adapt a day trading strategy to a swing trade strategy. The 3 Ducks strategy has a 4hr, 1hr and 5 min chart. Do you just look at longer term charts such as 1 Week, 1 Day, 4 hour. I have not read the 3 ducks thread (at least the first part) and will dive into that this weekend.
Thanks for any general guidance you can provide. --agcoast
The simplest [I]adaptation[/I] is to B[/B] enter trades exactly as outlined in the thread (and in the ebook) — but, B[/B] [I]modify your exits[/I] to stay in trades longer. If you employ a “set-it-and-forget-it” method of trade management, then your exits occur when TP’s (or SL’s) are triggered. [I]Where[/I] you place your TP’s and SL’s depends on the exit criteria you use, and on the time-frame on which you apply those criteria.
Here are a couple of excerpts from Andy Perry’s ebook which will illustrate what I’m saying —
[B]Potential Stop-Losses and Potential Profit Targets[/B]
Again it’s worth letting you know that the 3 Ducks is a discretionary approach - it is 3
steps that will let you logically observe trends, price and entries. Stop-losses and
potential profit targets are going to be up to you, your choice.
Day traders could use technical levels from a 1 hour or 5 minute chart for their stoplosses
and profit targets. A swing or position trader may prefer to use technical levels
from the 4 hour or even daily chart.
[B]Running a Winning Trade[/B]
When you look back on your monthly performance, your best months will be when
you let some of you winning trades run.
I could stay in this trade for as long as the current price remains above the 5 min
sma.
I could exit this trade if the current price moves below the sma. This is a good
example of how you can run your own winning trade.
Side Note
If you are a swing or positional 3 Ducks trader you could hold your winning trade as
long as the current price remains above the sma on the 1 hour or even 4 hour
timeframe.
Maybe I misled you a little bit, when I said, “The 3 Ducks Trading System is presented as a day-trading methodology.” The charts and examples presented in the ebook focus on the day-trading style, in that they show both entries and exits on the 5-minute chart.
But, Andy states over and over again that this is a system for identifying a trend and choosing an appropriate entry into that trend. Beyond that, the 3 Ducks system is meant to be incorporated into a trader’s preferred discretionary trading strategy. That preferred discretionary trading strategy can be built around day-trading, swing trading, or even position trading. (Andy does not recommend trying to adapt his 3 Ducks system to scalping, and he does not recommend trying to automate the system.)
You really need to devote some serious study time to the first part of the 3 Ducks thread, and to the ebook. I suggest that you email Andy for the ebook, as soon as you read this post. You’ll find his email address in THIS POST.
I would simply upload a copy of the ebook to the forum, for you to download instantly — except that Andy has specifically prohibited that. Here’s his statement on the subject:
I want to thank you Clint for all your pertinent info. I too, hold a day time job and am easing into this process very carefully.
I do not want to be inclusive to the “blown” account syndrome. Thanks again.
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Is it beneficial to just exchange the evening? at the end of the day, is there a Swing Exchanging Methodology, or book that comprises of exchanging the New York most recent few hours and close and the Sydney Open time. Is there a great deal of activity as of now
