As the Australian economy continues to grow, more and more people are turning to Forex trading to make money. And while there are many different ways to trade forex Australia, swing trading is becoming increasingly popular among Australian traders.
What is swing trading?
Swing trading is a technique used in Australia as elsewhere that attempts to profit off of small moves in a stock’s price on a short timeframe. Swing traders typically use technical analysis to look for stocks with short-term price momentum.
Why is swing trading becoming more popular in Australia?
There are a few reasons why swing trading is becoming more popular in Australia:
- The Australian economy is growing, with more people interested in investing their money in FX.
- Swing trading allows investors and traders to take advantage of the volatile nature of the Forex market.
- Swing trading can be done part-time, making it an excellent option for Australians who want to make extra money without quitting their day jobs.
How to swing trade in Australia
If you’re interested in becoming an FX swing trader in Australia, there are a few things you need to know.
Learn how the Forex market works
All traders must have an excellent understanding of the Forex market and how it works. You also need to be comfortable with risk and have a solid plan for managing your trades.
Find an online broker or trading platform
There are several different ways to get started swing trading in Australia. One option is to sign up to an online broker that offers swing trading services. Another option is to use a dedicated swing trading platform, such as TradeStation or eToro.
Create a trading plan
Once you’ve chosen a broker, the next step is to create a trading plan. This plan should include your goals, risk management strategy and entry and exit points for trades.
Start small
When you’re first starting, it’s essential to trade small amounts of money, helping you get a feel for the market and how swing trading works. As you become more comfortable with swing trading, you can increase the amount of money you trade.
Choose a swing trading strategy
Once you’ve chosen an online broker, you need to select a swing trading strategy. You can use several different strategies, so it’s essential to research and find one that best suits your trading style and risk appetite.
Some popular swing trading strategies include:
Trend-following strategy
This strategy involves following the trends in the market and buying into a new trend as it appears, then riding it up till the reversal.
Support and resistance strategy
This strategy involves identifying support and resistance levels in the market, buying when prices are close to the support level, and selling when they approach the resistance level.
Breakout strategy
This strategy involves monitoring for breakouts in the market and then entering trades when prices move outside of a defined range.
Monitor your trades
Once you’ve chosen a strategy and started trading, it’s essential to monitor your trades closely, helping you spot any potential problems and ensure that your trade is on track.
Risks associated with swing trading
Before starting swing trading, it’s essential to understand the risks involved. These include:
Volatility risk
The forex market is volatile, and prices can move quickly, which means that there is a risk that your trade could go against you and you could lose money. Make sure to familiarise yourself with techniques of reducing those losses.
Liquidity risk
The forex market is usually very liquid, but in some cases, particularly with exotic currency pairs, selling your holdings could become difficult in times of market stress.
Margin risk
When you’re swing trading, you’re usually using leverage, which means you’re borrowing money from your broker to trade. If the market moves against you, you could owe your broker more and be liable for margin calls.
Finally
If you’re interested in becoming an FX swing trader in Australia, make sure you do your research and start small. With a solid plan and a bit of practice, you will be on your way to success.
