Swing trading is a short-term strategy for a trader who is buying or selling currency using technical indicators that suggest an impending price movement. This trend can span any length of time, ranging from days to weeks. Swing traders place a heavy emphasis on technical analysis as a means of tracking a currency and determining when a “swing” is likely to occur. Swing trading generally means the trader isn’t concerned with the long-term value of a currency; they’re instead looking to profit from peaks and dips in momentum.

swing trading carries a sound methodology, but no one can avoid the fact that it’s a fairly risky approach. However, with risk comes reward; swing trading carries a number of key advantages that just might give it an edge over other popular trading methods.

Many trading methodologies have traders strapped in for the long haul—long trading hours, long positions, and long-term commitments are often the call of the day. Swing trading takes a different approach, offering traders a huge amount of flexibility. Because traders aren’t looking to hold anything long term, working instead from price swings, traders have a fair amount of trading flexibility. Jumping between sessions is plausible, whereas strictly day trading is another option. Regardless of traders trading-time preference, swing trading is flexible enough to suit.

Although there are profits to be found in swing trading, there are also risks that come with this method. The biggest risk comes during weekend hours, when the forex market is closed. Market changes could cause a price to gap and open at a much different price than its closing, which can put swing traders in a position where even a stop-loss is unable to spare them from a significant net loss.

Swing trading also exposes traders to the ill effects of market volatility, especially given the way swing trades are designed to capitalize on pullbacks and other short-term price movements—many of which may take place within a larger trend. Although volatility generally offers profit potential to seasoned traders, it can increase the risk presented by swing trading.

As a result, traders may miss out on profits that they might have secured just by focusing on long-term trends instead of swing opportunities.