Swing trading is playing an individual trading cycle on the H4 time frame If you inspect many H4 time frames and cycles you will see that each 4 hour bar on the bar chart adds up to approximately 3 to 6 days of holding time possibly longer. Each time the H4 red and green trend lines cross you can enter the trade using The Forex Heatmap for entry verification. When the cycle is over and the H4 red and green lines converge you would exit the trade. This works on trending or oscillating and ranging currency pairs, see the image below for an example of an oscillating/ranging pair.
In order to have the proper money management ratio in any forex trade entry you must have a swing trading as a minimum objective or position trading objective as your trading style and hold on to each trade for days to weeks if the market condition and trends will support this style. This way when you take the time and effort to trade the potential reward is significantly higher.
Swing trading works in a trending or oscillating market. You can play the embedded H4 swing cycles within a longer term trend, or if a currency pair is oscillating on the H4 time frame you could wait for one cycle to finish then when the pair reverses catch the new cycle, similar to the photo above.
Swing Trade Example Number 1 – A currency pair is oscillating on the H4 chart and is coming down, just let it finish the down cycle and stall then set a buy alarm at R1 for a buy and ride the new H4 cycle back up to resistance. This is a swing trade and the above chart is a good example of this, the chart example above also looks like a reversal.
Swing Trade Example Number 2 – In this example the currency pair you want to trade is in a long term strong uptrend on the W1 time frame. On a significant support or resistance break you enter the trade with confirmation from The Forex Heatmap. You can then exit all or some of your lots at the next significant resistance or support.
Swing Trade Example Number 3 – , explains how a currency pair can move significantly against its primary trend and when it stalls you buy it back as it resumes movement back into the trend.
Position trading is when you enter a trade when the D1 or W1 time frames red and green lines are crossing on the free trend indicators, guided by The Forex Heatmap®. The red and green line crossing look similar to the chart above just on a larger time frame.
Position Trading Examples – The D1 time frame fresh trend cross or developing fresh cross qualifies as a position trade using our free trend indicators. If the intermediate term or D1 trend is oscillating this also qualifies as a position trade. Obviously if the larger trends like the W1 time frame trends accompany the D1 fresh cross then the potential could be much higher on the W1 time frame.
Money Management Ratio
The proper way to trade the spot forex is swing style or longer term position and trends, and the risk reward ratios clearly support this. With swing to position trades your money management ratio starts around +3 and goes as high as +50. For each pip you risk you expect to make between 3 to 50 pips.
there are other tradingstyles we implement into our tradingstrategy in order to have the best entries while making profits in a ranging market as in a trending market.
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