This article is taken from the Forex Journal (May 2009 issue)
The author, Doug Schaff, has traded the Forex markets for close to 30 years. His website, fx-strategy.com provides trading tools, information and strategies to assist currency traders. The Swing 62 system is available for free download.
- Doug Schaff discusses the use of intermediate swing highs and swing lows to develop a shortterm approach to trading the currency markets.
Question – How can you use medium-term swing breakouts to catch profitable short-term trades?
Answer – Intermediate price high and low points shown by a swing indicator often identifies key support and resistance levels. When price trades through those swing levels, the subsequent market move is often quite powerful. The strong momentum following these breakouts can be seen by looking at a simple swing system. A short-term discretionary trader can better manage the risk and book profits from these breakout trades. These short-term trades, which I call “Pops” and “Drops,” can be quite profitable with good risk/reward characteristics. We will take a look at all of this after first reviewing swings.
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