Swing trading

Swing traders try to catch one "swing" of a market: a leg of a trend, a pullback, or a move from one side of a range to the other. Positions typically last from a couple of days to several weeks. Most swing traders work from daily and four-hour charts, using support, resistance, trends and indicators, often combined with the economic calendar.

It sits between day trading, where everything is closed before the end of the session, and longer-term position trading that can last months.

Why people choose it

• It needs less screen time than scalping or day trading, so it fits around a job.
• Targets are larger, so spreads and commission take a smaller share of each trade.
• Decisions are based on daily closes rather than minute-by-minute noise.

Costs and risks specific to swing trading

• Swaps: positions are held overnight, so swap charges add up, including triple swap on Wednesdays.
• Gaps: holding over weekends and news releases exposes you to price gaps that can jump past a stop-loss. See gap risk and weekend risk.
• Wider stops: a daily-chart stop might be 60 to 150 pips away, so position size must be smaller for the same money at risk.

Example

Illustrative figures: a trader with a 10,000-euro account risks 1% (100 euros) on a EUR/USD swing trade with an 80-pip stop. At roughly 9.20 euros per pip per standard lot, the position size is 100 divided by (80 times 9.20), or about 0.14 lots. If the trade is held for 8 nights at a swap of minus 0.90 euros per night for that size, swaps add about 7 euros before any triple-swap night.

The position size calculator helps here. See also multiple timeframe analysis.