Forex Swing Trading Strategy #1:(1-2-3 Swing Trading System)

The 123 forex trading system is a very simple swing forex trading system that many swing traders will definitely find it much easier compared to other much more advanced swing trading strategies and systems.

The 1-2-3 trading system works by identifying areas of support and resistence that are formed as the market is trending and trades are entered on the break of these support or resistence levels.

Timeframes: 1hr and above

Indicators: You can can use 100% Price Action or add a few indicators to filter your trades (eg: MACD)

Currency Pairs: Any

Short Entry Rules:

(a) Place a SELL STOP order 1-5 pips below point (2)

(b) Place stop loss 1-5 pips above point (3)

(c) Your profit target should be placed at 3 times the stop loss distance


Long Entry Rules:

(a)Place a BUY STOP order 1-5 pips above point( 2)

(b) Place stop loss 1-5 pips below point(3)

(c) Profit Target= 3 times the stop loss distance


How To Manage Your Trades

The following are a few techniques on how you can manage your trades that are in profit:

  • if your trade is in profit by amount risked you may consider moving your stop loss to break-even
  • if your trade is in profit by more than 2 times the amount risked, move your stop loss to lock in profit equal to the amount risked initially.
  • if your trade is in profit by the amount risked, you may consider closing half of your trading position and move stop loss to break-even so whatever happens, at least you got some profits out…and leave the rest of the position to run to see if it hits your take profit target.

Advantages of the 1-2-3 Forex Swing Trading Strategy

  • a solid swing trading strategy based on solid trading fundamentals of support and resistence trading which is simple to understand and implement by beginners.
  • when the support or resistance levels are broken in a nicely trending market or a market that is just starting on a new trend, the price movement are usually explosive and profits targets are hit quickly.
  • you can use just price action to get into trades or 1 or 2 forex indicators, especially MACD to filter your trade entries.


Disadvantages of the 1-2-3 Swing Trading Strategy

  • stop loss distances are often large and position sizes need to be calculated to get your trading risks to a suitable level as per your risk management plan.
  • the 1-2-3 swing trading system performs poorly in a sideways trending market.

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