The real secret to success in the Forex markets is finding a trading strategy that aligns with your goals. Mixing and matching long-term tactics with short-term goals (or vice versa) is a surefire way to burn up your investment capital, tank your odds of success, and inevitably compel you to pull your money out of Forex altogether.
If you are going to be trading in hopes of piling up short-term profits (big short-term profits, too) you need to learn the ins and outs of swing trading. On top of that, you need to learn how to identify the best currency pairs for swing trading Forex and focus all of your efforts exclusively on those pairs and this strategy. With that being said, which forex pairs should you be using for swing trading?
The best forex pairs to swing trade are those pairs that frequently trend, for instance, EURUSD, GBPUSD, EURJPY and USDCAD. Any pair that is influenced heavily by economic factors will make a great pair for swing trading, hence why most USD pairs are great for swing traders.
Which Forex Pairs Are Best for Swing Trading?
Swing trading Forex is often compared to daytrading, but while the two are similar in their short-term strategies swing trading is a different animal altogether.
Daytrading takes place during a single day. You get into and out of positions in a very short block of time.
Swing trading, on the other hand, may have you getting into and out of positions on the same day, over a couple of days, or even over a couple of weeks. It’s still a short-term form of trading Forex for sure – but it doesn’t lock you into the same rigid box that daytrading will.
On top of that, swing trading also offers a little more trading time flexibility, allows you to more clearly identify your positional boundaries to enter and exit different trades, and helps protect you with smaller stop losses.
The trick, though, is finding the right currency pairs that allow you to make money on these kinds of swing trades.
That’s why it’s so valuable to focus exclusively on the best currency pairs for swing trading Forex when you’re trading according to this strategy.
What are those currency pairs, you ask?
Well, history shows us that the best pairs to trade with swing strategies in the Forex market are major currency pairs – we are talking pairs like EUR/USD – as these are the pairs that respond most to different economic influences and are the easiest to read and breakdown.
Sure, they don’t have the same kind of volatility that other currency pairs have. But that’s a good thing with a swing strategy.
Focus your attention on pairs like:
…and you’ll find that your swing trading strategies become a lot easier to execute.
Which Forex Pairs Don’t Work for Swing Trading?
Just as important as finding the right pairs to trade is making sure that you steer clear of pairs that cannot produce with this strategy.
The kinds of pairs you want to avoid as much as possible are the more exotic pairs, minor pairs, and the pairs that aren’t going to respond as much to economic news the same way as major pairs.
These pairs are a lot more volatile than major currency pairs and a lot less liquid. That makes them tougher to predict and tougher to swing reliably. The unpredictability and volatility means they can swing one way and another before you even have a chance to execute your positions.
For these reasons (and more) you want to do you level best to keep clear of minor pairs and exotics. They just don’t have the kind of consistency that you need when you’re looking to make moves as a swing trader specifically.
Using Major Forex Pairs for Swing Trading
If you want a shortcut to success with swing trading Forex it’s import ant to focus on a handful of technical indicators – all indicators that are going to help you spot a new swing before it actually unfolds.
Moving averages give you the kind of insight you need (especially longer term moving averages) to spot trend reversals. Not only that, but they can also give you the insight you need to spot the potential strength of the reversal.
That’s a big piece of the puzzle. Not only do you need to see the new swing coming, but you need to know if it’s worth getting positions on.
The Relative Strength Index (RSI) is another indicator that will help you be a more successful swing trader.
RSI should help to identify if you’re looking at bullish or bearish setups as they come together. This is huge for spotting a new trend in the short term, giving you the green light – or the red light – for a swing trade.
If you spot an RSI that climbs beyond 70, the chances are pretty good you’re going to see a price decline due to overbuying. If you see an RSI that drops below 30, the odds are good you’re looking at underbought positions that should shoot up in the short term.
Of course, it’s also important to be sure that you’re looking at things like lines of support and resistance as well.
Technical analysis is a big part of successful swing trading Forex. You need to be nose deep in the charts, sticking to your trading strategy, and only looking at the major pairs (like the ones we highlight above) to improve your odds of success.
Stick to the info we shared in this guide for swing trading, though, and you’ll be able to make many more successful trades in the world of Forex than you would have been able to otherwise.
Have the right blueprint for swing trading and you’ll be able to generate some real money with Forex!
In Conclusion – What Forex Pairs Should I Use For Swing Trading?
In summary, the best forex pairs to swing trade are pairs influence by economic factors like EURUSD and GBPUSD, as well as USDCHF, USDJPY, EURJPY, AUDUSD, and NZDUSD.
You should avoid trading minor pairs and exotic currencies, which can be more volatile and less predictable than majors. Use technical indicators like moving averages and the RSI to help you enter trades at the right time.
Which currency pairs do you like to swing trade? Let me know in the comments below.