By: Terry Allen
You may find, that despite your best intentions, you still experience great difficulty adhering to the rules of your FX trading strategy. Do not despair because many other traders have the same problem. Why is this? To answer this question, let us consider a type of trading that you can readily derive a set of rules which you should be able to trade consistently. The method, in question, is Swing Trading but despite its inherent features to provide such facilities, many of its users are still unable to trade with the required discipline necessary.
Swing traders search for new trading opportunities by detecting currency pairs with short-term price momentum. Once they have opened new positions they then seek to sustain them for periods from a couple of days to weeks. Basically, they attempt to trade currency pairs using their intra-week or intra-month oscillations between overbought and oversold conditions. Expert consensus advises that this type of trading is best performed when the market is trading sideways and not following a trend.
Swing trading readily provides a better basis for a trading strategy than many other popular methods. This is because you can more easily detect new entry and exit conditions using the crossover points of many suitable technical indicators, e.g. RSI and Stochastic. Despite these obvious advantageous, many traders still have great difficulty trading this technique with the discipline necessary to stick to their trading strategies. Why is this because if you study historical records of any applicable currency pairs, they clearly highlight well-structured tops and bottoms? Form this hindsight point of view, trading such patterns looks relatively easy.
However, you will find that reality is a different story. This is because you need to be patient when timing new entry points. In addition, you need to possess a mindset that can cope with the fear generated from short-term dips in open equity. You must trust your trading strategy and focus on your long-term goals without being deviate by any negative events that cause price to move against your positions.
You will find, however, that these skills are difficult to master because real-time trading generates undesirable emotions that you will find difficult to suppress. You will need to develop the courage of your convictions as well as psychologically enhancing your mindset so that you can cope with counter-trend swings and focus on the bigger picture. In short, you must find ways to develop the faith and trust in your trading strategy.