Best Swing Trading Strategies In The UK For Currency Pairs

Last Updated July 23rd 2021
6 Min Read

There are a number of money-making opportunities in the forex market. However, as a beginner, with so many variations in trading styles, how do you decide on what kind of trading style and trading strategies you need to follow? 

An example of short term is day trading where positions need to be settled before the trading day is over. On the other extreme, there is the long term trading where positions taken can last up to months even. But in the medium term – in a span of 2 days to, say, a month – a forex trading strategy that is widely used is swing trading.

If you are someone who likes to capture significant, single and spread out moves in the market, then you can consider swing trading. As mentioned above, swing traders trade with a multi-day to multi-week time frame and make the use of both fundamental and technical indicators decisions for informed decisions.

If you want to be a swing trader, you need to mostly depend on technical analysis and charts. This will help you predict the potential swings in prices over a period of time. Taking the historical data of the price performances of the currency pair and the existing market conditions, swing traders can make an informed decision on how a currency pair moves. 

Swing trading style is best suited for traders who have full-time jobs as they do not require to be in front of the screen for the whole day.

Advantages of Swing Trading

Less time analysing: A swing trade does not need to spend much time constantly monitoring and analysing the charts as they are doing fewer trades over longer periods. A swing trader gets more time to make decisions and place their positions, and is one of the best trading styles for beginners.

Take advantage of longer term trends: Though, forex swing trading tends to work best for shorter time frames, the trend-following strategies can be applied for months. 

Cost-efficient: Swing traders place fewer trades over a longer period of time. Unlike short term trading, where the spreads are small, for swing trading the spreads do not matter and get charged less frequently.

Make most of significant price swings: For forex swing trading, the more volatile the market is, there are more oscillations and a number of swing trading opportunities.

Some of the most popular forex trading strategies involve currency pairs like NZD/USD, USD/CAD, AUD/USD, EUR/USD, AUD/EUR, EUR/CAD, EUR/JPY and EUR/GBP. 

Read Also: How Much Money Can I Make Swing Trading?

Top Indicators for Swing Trading Currency Pairs in the UK

Below are few of the top indicators that you can use to build quick trades with currency pairs.

  • Moving averages: Moving averages is one of the best indicators that can help a swing trader identify a trend reversal, i.e., when a currency pair is over sold or over bought. This indicator is used to find the market’s average closing price over a specific period of time.
  • RSI: This indicator is one of the best ways to help you make profits within a short time frame. A RSI (relative strength index) can detect possible forex swing trade opportunities.
  • Stochastic oscillator: Another leading indicator is the Stochastic oscillator indicator. The normal trend seen in the market is that the momentum usually swings ahead of market volumes or the price. A Stochastic indicator makes an assessment of the most recent closing price and the previous trading range for a given period which helps a trader to predict the oscillations.

Check Out: 20 Types Of Technical Indicators Used By Trading Gurus

Swing Trading Strategies in the UK for Currency Pairs

Now, let us take a look at the best swing trading strategies in the UK for currency pairs that can be beneficial for any beginner trader.

Trend Trading

This strategy works well for most of the different trading instruments, be it stocks, futures, options and cryptocurrencies. It is one of the best currency trading strategies, as well.

Markets never move in a straight line, there is always an up and down movement. Look out for uptrends, then downtrends and try to catch a shorter trend.

Counter Trend Trading

Counter trend trading strategy uses the same principles, but in the reverse direction.  Here, one needs to spot fairly short term trends that happen when a currency is oversold or over bought. Profit from the frequency with which these trends tend to break down and always try to draw a line under the trade.

Exponential Moving Averages (EMA) crossover strategy

Another swing trading strategy that commonly used in the UK for currency pairs is the Exponential Moving Averages (EMA) crossover strategy.

The EMA strategy gives traders clear trend signals and entry and exit points and can be used to time an exit of a long position.

Bollinger Band Strategy

The Bollinger band is best used to point out potential turnaround points for currency pair prices. The two bands - upper and lower - represent the significant resistance and support levels respectively.

Here, the plan is to identify an overbought and oversold situation. The idea is to check the underlying quote, so if it moves outside of the upper Bollinger band, the currency is overbought and it’s time to take profits. On the other hand, if the underlying falls below the bottom Bollinger band, it is considered to be oversold.

Bonus Tips for Creating Swing Trading Strategies in the UK for Currency Pairs

You never know which currency pair will work for you. So, instead of narrowing down on one specific currency pair, you could test your strategies on several currency pairs and see where you are getting better results for a longer term.

Trading strategies may work on certain occasions and may not work sometimes. You can try different approaches to improve your forex trading strategies. Formulate the strategies that work for you and note the market conditions. You would need to further test your strategies and if certain strategies do not work constantly, then should be dropped.

Connecting with other traders can open you up to smarter investing strategies in not only forex trading but in multiple types of assets that can be of great help as a beginner and in the long run. It is always worthwhile to go through trading forums to get inspiration and for expert advice. Discuss strategies and exchange ideas and experiences with other responsible traders. 

Never over-trade - this is one of the main reasons why forex traders fail. Set your own rules and stick to them.

Always test your strategies before trying them live. Open a demo account and practice as much as you can.

Don't Miss: How To Build Quick Trades With Currency Pairs For Swing Trading In The UK

eToro – Best Forex Trading Platform

etoro broker

67% of retail investor accounts lose money when trading CFDs with this provider.

Read More:

Complete Swing Trading Guide

What are the Pros and Cons of Swing Trading?

The Best Forex Trading Strategies That Work

The Risks of Forex Trading

Devising A Profitable Forex Trading Strategy

Top Brokers in
    All Regulated Brokers
    67% of retail clients lose money when trading CFDs with this provider.