How to Swing Trade the FOREX While Having a Day Job in the U.S.
The stock market has traditionally been the first place to look for winning trades but if you're holding down a job during the daytime when the stock exchange is open, it can be tough to do both. However, if you're wanting to learn how to swing trade the FOREX while having a job in the U.S. then it helps that the FOREX market is open around the clock unlike the stock market. Investors are looking to currencies to trade outside of their work hours because of the flexible hours and strong trends for swing trading.
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Instructions
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The Sweet Spot
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1
Go to FreeStockCharts.com. You may need to download its Silverlight plug-in. Once you're logged on then pull up a chart with the 10-day SMA (simple moving average), the 20-day SMA and the 30-day EMA (exponential moving average) overlaying the price action.
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2
Scan the currency pairs on the price search portal and observe the price action on the price chart. You want to look for the "Order of Things" in assessing the trend. Price for the currency pair you're analyzing should be above the 10-day SMA, the 20-day SMA and 30-day EMA for an upward trend is the "Order of Things" for a long position. Conversely, when price for a currency pair you're analyzing is below the 10- and 20-day SMAs and 30-day EMA for a downward trend you have the proper "Order of Things" for a short position.
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3
Prepare to enter the trade when price action pulls back from its high but without piercing the 20-day SMA. It's OK for price to pull back into the 10-day SMA but if it pierces the 20-day SMA or the 30-day EMA, then the trade setup is void.
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4
Trade off the high of the price bar that establishes the lowest low made but without going below the 20-day SMA and the 30-day EMA. Once the price trades above the high of that price bar then momentum re-establishes itself to the upside and you want to latch onto that move. Set a stop underneath the lowest low of that bar, so that if it is hit, then you know momentum is lost to the upside and you protect yourself from any further downside risk.
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Tips & Warnings
Currencies in the FOREX market tend to trend more often than the stock market, so this method allows you to quickly glance at a currency pair's price action to assess the trend when you are at home from work and whether or not to swing trade the setup. Dave Landry, a swing trader and hedge fund manager, developed this style of swing trading for the stock market but its application can be used in all markets with proper money management.
The FOREX is a highly volatile market, so be sure to always use stops and have a backup plan if the market goes against you. Always protect your capital by controlling your risk through position size and price stops. The FOREX is widely accessible at all times of the day which makes it a convenient market to trade even though you may still be working within the U.S. but always exercise caution to protect yourself in the event the trend reverses.
