What are Pivot Points and how is it related to swing trading? Swing trading is a Forex trading style with market swings as the identifying basis. Swings take time to develop, therefore, this trading style is mostly done for several days. Visualizing as surfers, traders who tend to use this trading method usually catch long, big waves. But these waves can’t be caught that easily. Traders need to identify first the major pivots in the financial market.
Swing trading has become very popular among traders who are seeking to have extended breaks away from their screens. And because these trades are developed after a long time, this gives traders a chance to become less active and step away from the monitor easily. Getting burned-out is very unlikely among swing traders.
Drawing a Line Between Scalp Trading and Swing Trading
If there are two known groups of traders that we have now, it would be between swing traders and scalp traders. Though there are similarities in their characteristics, there are clear differences that set them apart.
Scalp Trading is known to be an aggressive form of day trading which happens within a short period, even minutes. Because of this, traders need to stand-by at their computers throughout the day, focusing on the charts and the flow of market information. The main goal of scalp traders is to have small profits out of doing many trades. These types of trades tend to not hold into their positions for a long period and benefit from small market movements.
But with swing trading, it portrays a totally different story. Swing traders tend to have more freedom than scalp traders. Swing traders are required to spend a long time in the market but scalp traders are allowed to jump back and forth into the market whenever they like. But it is not appropriate to say that stress is not present with scalp trading. In fact, stress is more felt in scalp trading as the traders here need to act fast and actively depending on the market conditions.
Explaining the Pivot Point
Pivot points found in the market wherein a price changes its direction. In Forex trading, it is very important to know how you can identify and spot these pivots. Take note that there are important points while there are also less important points that you need to spot. For swing traders, they will refuse to set their focus on the minor pivot points. But for scalpers, they tend to take advantage of minor pivot points.
How To Spot The Pivot Points in Forex Trading
It is good to know that major pivot points are easy to see. They are the ones that are formed near the support and resistance levels. There is also a time when they create a new important level, a point where sellers and buyers tend to be very active. As for minor pivots, they form randomly.
Every trader has their own likes and dislikes. Swing trading is more efficient and profitable with each move you make in the market. If you think that swing trading is a good fit for you then you have to give it a go. Understanding how swing trading works is a step forward to becoming a professional trader.