Swing Trading

Values of currencies undergo fluctuations daily. When you buy or sell money at the end or near the end of up and down price movements, then you are doing swing trading. The money of swing trading is there when you alone are able to predict whether a favorable price movement is about to take place. Computer software has been developed for this purpose and big investment firms like Goldman Sachs has been known to spend millions of dollars for software development. When these algorithms start to amass a sizeable following, the profits are distributed to many, instead of a few.

Swing traders recognize that there is no need to buy or sell at the exact swing points. Besides, they have long recognized that there is no foolproof or 100 percent accurate algorithm that will work in predicting a change in prices.

When there is a bull or bear market, there is a clearly defined pattern of price movement. The opportunity for money making is clearly present but profit potential is less because everyone is into the game. When the market is moving sideways, there is a greater chance for loss because false positives abound. But for the investor who has invented a better algorithm, this is chance to make a lot of money because everybody else is not interested.
The greatest attribute for a swing trader is patience. A good swing trader knows that he is not into active trading. He knows that his objective is to profit from price movements that may take the course of several days.

The identification of which currencies are good candidates for swing trading is called technical analysis. It is a study that related to the forecasting of future prices based on past behavior of market data. Technical software already exist . At its minimum, the software must be capable of displaying charts that shows a time series of market data. It is good if the software is able to adjust the time interval (the x axis) because short term traders use shorter time intervals like minutes while long term traders would like to see price behavior in a longer term like daily, weekly or monthly periods.

Another desirable feature for technical analysis software is back testing which can be used to verify your timing strategy against recent historical data. The purpose of back testing is to develop a strategy that is supported by market data that will generate a positive return.
Another useful feature is scanning, that is capability to scan available market data and identify financial instrments that meet your criteria.

All the data that technical analysis software uses ultimately comes from data feeds. Types of data feed can be EOD (end of day), delayed or real time. EOD data is typically the closing day’s prices while delayed data is around 15 to 20 minutes late. Delayed data is the most commonly used type of feed.

Swing trading and the buy and sell cycle that goes with it takes a longer a longer amount of time than day trading. Affordable computers plus the availability of high speed internet connections make swing trading a realistic money making opportunity for private individuals.