Scalping versus Swing and its trading characteristics in the FOREX market. The investments of independent traders and this growing wave of knowledge of the Foreing Exchange (FOREX) market through various information channels, show that this market has a higher risk ratio if the information is incorrect or incomplete.
As in every branch of knowledge and profession, experience and practice are fundamental for a correct application. In the FOREX market as in other markets the “time” is very important, both for the return on investment and the time to acquire a financial asset, but in this Blog we talk about currency pairs.
Independent traders must have specific rules, methods and tools when entering the market with one of the many investments, we will talk about the “time” to maintain the position of buying or selling a currency pair.
The times to maintain a trade are as follows.
Scalping = Less than 24 hours and multiple trades.
Intraday = Equal to 24 hours few trades
Swing = More than 24 hours and less than 1 week
Long = Greater than one week
Traders or investors who operate in the times mentioned above their methods are very divergent, because if we take Scalping with Swing, their characteristics are totally different.
Characteristics of Scalping
Its method of operation is in minimum graph temporalities, in one minute (M1), fifteen minutes (M15), in thirty minutes (M30) and as maximum in one hour (H1).
Entering the market and leaving is a matter of very little time, an operation can last less than 1 minute or until before 24 hours.
The profit in terms of pips are minimal, from 1 pip to 20 pips or more.
The same Stop Loss, are also minimum pips of travel and according to risk management, an example of this is the Martingala operation.
Trading methods are very much based on price action and technical analysis.
The volume of capital can be high or small as most trades are low lotage.
The time the trader must spend in front of the PC or on the platform must be continuous to review the chart.
An operating method can be of compound interest
There are multiple operations with the possibility of reaching up to 20 operations a day.
The best time to operate this method is in market openings, that is, in European or American market openings.
Scalping versus Swing and its characteristics of operation in the FOREX market.
Operating characteristics Swing
Its operation method is in temporalities in one hour (H1), in four hours (H4), in day (D1), weekly (W1) and monthly (1M).
Leaving a position can take several hours and even days.
Gains in pip terms are great from 30 pips to 200, 500 pips.
The determination of stop loss is equally high, from 30 pips to 100 pips and according to each trade its risk management, determined by a percentage of the account.
Trading methods are based on technical analysis, market cycles, prolonged upward or downward trends, chartism or harmonic patterns.
The volume of capital is sometimes high to have a high percentage of “margin”.
The time the trader or investor spends on the trade is a matter of hours once or twice a day.
The trading method is mostly simple interest.
Few operations are done to close before the end of the week.
Any time is a good time to trade as this is long term and any move is mostly corrective.
So the best trading method depends on the trader and how he is mostly accustomed, neither is better than the other. But practice and discipline as in any financial market is important to have the greatest number of winning positions as well as success in the method.
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Author of the blog
Graduated in Economics with a specialty in bonds from UNAM, trader in the marking of foreign exchange, stock and over-the-counter assets, columnist, writer, lecturer and master in courses on financial assets.