The beauty of swing trading (especially with a rules based strategy) is the potential for great risk reward ratios over long periods. Now obviously risk/reward ratios can be applied to any time frame but swing trading allows you to capture much larger gains over a set time period and are easier to manage.
Let me use this trade taken back on October 21 as an example.
It was a range trade that risked 130 pips, and when nzd/cad was at its highs, the risk/reward ratio was over 4 and the net gain was nearly 500 pips. If I was trading on a smaller time frame looking for the same risk/reward ratio but lets say the gain would be 30-40 pips, I would had to be right 13-17 times (over the same 3 month period) to get to 500 pips in profit. Because market timing on any time frame is so difficult, it is much easier to be right once and let time and trend work in your favor then to try to be right 17 times.
Let me use this trade taken back on October 21 as an example.
It was a range trade that risked 130 pips, and when nzd/cad was at its highs, the risk/reward ratio was over 4 and the net gain was nearly 500 pips. If I was trading on a smaller time frame looking for the same risk/reward ratio but lets say the gain would be 30-40 pips, I would had to be right 13-17 times (over the same 3 month period) to get to 500 pips in profit. Because market timing on any time frame is so difficult, it is much easier to be right once and let time and trend work in your favor then to try to be right 17 times.
