Swing Trading: The intermediate strategy every beginner should consider

When you start your journey in the financial markets, you face a crucial decision: which trading style best fits your availability and goals? Some traders focus on intraday speculation, analyzing charts every minute. Others prefer long-term investments, waiting months or years. But there is an intermediate option that many overlook: swing trading. This approach offers a perfect balance for those who want to achieve consistent profits without being glued to the screen all day.

▶ Why is swing trading different?

Swing trading is not a complicated strategy. In fact, it is quite accessible for beginners. The key lies in its pace: while day trading demands constant attention, swing trading allows you to be more selective. A swing trader seeks to capitalize on price movements that develop over days or even weeks, using technical indicators to identify when a market trend change is likely to occur.

The philosophy is simple: instead of chasing small movements within a single day, you identify broader oscillations within a general trend. For example, while a traditional trader waits five months to achieve a 25% gain, a swing trader could reach a 5% weekly return, accumulating significant gains over time.

▶ Understanding the mechanism of oscillations

Asset prices always move in zigzag patterns. This is what traders call “oscillations.” When a price rises to a maximum level and then begins to decline, a “high oscillation” is formed. Conversely, when the price hits a minimum and bounces upward, it is a “low oscillation.”

The goal of swing trading is precisely this: identify where these oscillations start and end, establishing positions at optimal points. Imagine observing the EUR/USD price: you detect a significant low on May 12, followed by a notable rise to the peak on the 30th of the same month. This type of behavior is exactly what a swing trader looks for: capturing the full upward movement without worrying about what happened before or after.

The key is to recognize a consolidation phase before the “breakout” of the price. This is a signal that experienced traders constantly manage to predict the opportunity to act.

▶ Which assets work best for this strategy

Swing trading is versatile. You can apply it to any instrument that presents identifiable oscillations: stocks, currency pairs, ETFs(, or cryptocurrencies. However, some assets perform better than others.

For currency-focused traders, the most effective pairs are:

• US dollar pairs: EUR/USD, NZD/USD, AUD/USD
• Pound sterling pairs: GBP/CAD, GBP/CHF
• Euro pairs: EUR/GBP, AUD/EUR, EUR/JPY
• Japanese yen pairs: JPY/CAD, USD/JPY

EUR/USD stands out among all because it offers low spreads and predictable volatility. Although many traders prefer these major pairs, it is also possible to work with minor or exotic pairs if you understand that larger price movements can compensate for higher spreads.

Large-cap stocks are ideal for swing trading because they oscillate between well-defined highs and lows, creating multiple entry and exit opportunities. Similarly, ETFs that move within broad and clear channels are excellent candidates.

▶ Technical tools every swing trader needs

To identify oscillations and manage trades from start to finish, traders rely on technical indicators. The most useful are:

) Support and resistance

These levels are the cornerstone of technical analysis. Support represents a zone where buying is strong enough to halt a price decline. Resistance is the opposite: a level where selling pressure exceeds buying, causing the price to retreat.

Building a strategy around these levels is fundamental for success in swing trading.

Simple Moving Averages ###SMA(

This is the most popular indicator among swing traders. Moving averages smooth out price data by calculating an average that updates constantly. For example, a 10-day moving average sums the closing prices of the last 10 days and divides by 10. This calculation is repeated daily, generating a smooth line that helps eliminate chart “noise” and visualize clearer trends.

) Bollinger Bands ###volatility(

Volatility is crucial for swing trading. Bollinger Bands measure how much a price is expected to move, helping traders select assets with enough movement to generate significant profits.

▶ Swing trader versus day trader: fundamental differences

The main distinction between these two strategies lies in the duration you keep your positions open. A swing trader leaves trades open overnight, spanning several days or even weeks. A day trader, on the other hand, closes all positions before the market closes, often within minutes.

This difference has important practical implications:

Day trading is exhaustive. It requires monitoring charts throughout the trading day, looking for small price variations. This means that this trading style demands your full attention and is difficult to combine with other responsibilities.

Swing trading is more flexible. You don’t need to constantly watch the markets. This makes it ideal for beginners who still have a full-time job, or for investors who want to operate as a secondary activity from home or while traveling.

▶ Advantages and disadvantages of swing trading

) Advantages

Less time-consuming: Unlike day trading, you don’t need to be constantly in front of your screen. This makes it accessible to most people.

Higher gains per trade: The goal is to capture a significant portion of medium-term movements, resulting in trades with attractive risk-reward ratios.

Smoother learning curve: Operating with more generous reaction times allows you to study charts more calmly and improve your skills gradually.

Disadvantages

Exposure to nighttime and weekend events: Keeping positions open outside normal market hours exposes you to “price surprises.”

Timing is complex: Swing trading heavily depends on technical analysis and the ability to predict trend changes. Market behavior can be random and turbulent during these periods.

Requires technical precision: Having intuition is not enough. You need to develop a solid understanding of charts, patterns, and numbers.

▶ Risks and final recommendations

Swing trading is suitable for new traders, but a golden rule must never be broken: only use money you can afford to lose. Even with strict risk management, the unexpected is always possible.

As a practical recommendation: start slowly. You don’t need to risk significant capital from day one. Gradually increase your activity as you gain experience and confidence.

Also, familiarize yourself deeply with technical analysis. Dedicate time to studying the indicators mentioned here and how they interact under different market conditions. The difference between a successful trader and one who frequently fails lies in the quality of their technical education and their discipline to follow a pre-established plan.

Swing trading is not the “correct” strategy for everyone, but for those seeking a balance between potential profitability and time flexibility, it is hard to find a better option.