In the world of forex and CFD trading, Swing Trading stands out as one of the most effective strategies for traders who want consistent returns without the stress of constant screen time. Unlike day trading, swing trading captures price “swings” over several days or weeks—making it ideal for part-time traders, professionals, and those who prefer a more strategic approach.
To succeed in Swing Trading, you need powerful tools, accurate market analysis, and an understanding of hidden costs like Funding Pips. The Types of chart in MT5 provide the visual clarity needed to identify trends and reversals, while the MT5 trading platform offers the advanced functionality to execute your strategy with precision.
In this in-depth guide, we’ll explore how Swing Trading works, how to use the Types of chart in MT5 for better decision-making, and why Funding Pips can turn a good trade into a great one.
What Is Swing Trading?
Swing Trading is a medium-term trading strategy that aims to capture gains over a period of 2 to 10 days, sometimes longer. Traders use technical and fundamental analysis to identify potential price movements and hold positions overnight to ride the momentum.
Key Features of Swing Trading:
- Holding Period: Typically 2–10 days (sometimes longer)
- Fewer Trades: Focuses on high-probability setups rather than constant activity
- Technical & Fundamental Analysis: Uses chart patterns, indicators, and macroeconomic trends
- Ideal for Part-Time Traders: Doesn’t require full-time screen time
- Works Well with Automation: Alerts and pending orders reduce manual effort
Swing traders often use tools like moving averages, Fibonacci retracements, RSI, and Bollinger Bands to identify entry and exit points. They thrive in trending or range-bound markets and avoid overtrading by waiting for confirmation.
Why Swing Trading Is Ideal for Forex
The forex market is uniquely suited for swing trading due to:
- 24-hour market access – No gaps between sessions (except weekends)
- Strong trends – Major currency pairs often move in sustained directions
- High liquidity – Tight spreads and reliable execution
- Predictable volatility patterns – Especially around economic releases
Popular currency pairs for swing traders include:
- EUR/USD – High liquidity and strong trends
- GBP/USD – Volatile, ideal for breakout strategies
- AUD/JPY – Sensitive to risk sentiment and interest rates
- USD/CAD – Correlated with oil prices and Bank of Canada policy
By combining technical setups with macroeconomic insights, swing traders can ride multi-day moves with minimal stress.
Types of Chart in MT5: A Swing Trader’s Best Tool
One of the most powerful features of the MT5 trading platform is the variety of Types of chart in MT5. Each chart type offers a unique perspective on price action, helping swing traders identify trends, reversals, and key support/resistance levels.
Here are the Types of chart in MT5 most useful for swing traders:
1. Candlestick Charts
Candlestick charts are the gold standard for technical analysis. Each candle displays the open, high, low, and close (OHLC) prices for a given period.
- Green candles = bullish movement
- Red candles = bearish movement
Candlesticks help identify powerful patterns like:
- Doji (indecision)
- Hammer (potential reversal)
- Engulfing (strong momentum shift)
These patterns are essential for timing entries and exits.
2. Line Charts
Line charts connect closing prices over time with a continuous line. While they provide less detail, they’re excellent for identifying long-term trends and smoothing out noise—perfect for higher timeframes like H4 or D1.
3. Bar Charts (OHLC)
Bar charts show the same data as candlesticks but in a minimalist format. Each vertical bar represents:
- Open (left tick)
- High (top of bar)
- Low (bottom of bar)
- Close (right tick)
Bar charts are ideal for traders who prefer a clean, clutter-free view.
4. Renko Charts (via Add-ons)
Renko charts ignore time and focus purely on price movement. Each “brick” represents a fixed price change (e.g., 10 pips). A new brick forms only when price moves by that amount.
Renko charts are great for:
- Filtering out market noise
- Identifying strong trends
- Avoiding false breakouts
Traders often use Renko charts alongside traditional time-based charts for confirmation.
5. Point and Figure Charts (via Add-ons)
These charts emphasize directional movement without considering time or volume. Favored by swing and position traders, they help identify:
- Breakout levels
- Price targets
- Long-term reversals
While not built into MT5 by default, third-party plugins make them accessible.
Understanding Funding Pips: The Hidden Advantage of Holding Positions
One of the most overlooked yet powerful aspects of Swing Trading in Forex is Funding Pips—a feature that can turn holding a position overnight from a cost into a benefit.
What Are Funding Pips?
Funding Pips, also known as swap rates or rollover fees, are applied when a forex trade rolls over past the daily market close (usually at 5 PM EST). These values depend on the interest rate differential between the two currencies in a pair.
For example:
- Holding a long position on AUD/JPY may result in positive Funding Pips because Australia’s interest rate is higher than Japan’s.
- Holding a short position on USD/CAD might incur negative Funding Pips if U.S. interest rates are lower than Canada’s.
You can view exact Funding Pips values in MT5 by:
- Right-clicking on a currency pair in Market Watch.
- Selecting “Specifications.”
- Checking the “Swap Long” and “Swap Short” values.
Although Funding Pips may seem small—often just a few pips per day—they accumulate over time and can significantly impact your bottom line.
How Swing Traders Can Use Funding Pips to Their Advantage
Unlike day traders who close all positions before market close, Swing Traders naturally hold positions overnight—making Funding Pips a critical factor in overall profitability.
Here’s how smart swing traders leverage Funding Pips:
1. Carry Trade Strategy
The classic carry trade involves buying a high-interest-rate currency and selling a low-interest-rate one. For example:
- Long AUD/JPY: Earn positive swap daily
- Long NZD/JPY: Another high-yield, positive-swap pair
Even if the price stays flat, the trader earns Funding Pips every night—turning time into profit.
2. Avoiding Negative-Swap Pairs
Swing traders avoid holding pairs with high negative swap unless the technical setup strongly justifies the cost. Examples include:
- EUR/CHF
- USD/TRY
- Short AUD/JPY
Holding these for multiple days can erode profits—even if the trade is technically successful.
3. Triple Swap on Wednesday
Most brokers apply triple swap on Wednesday to account for the weekend rollover. Swing traders use this to their advantage by:
- Holding long positions on positive-swap pairs through Wednesday
- Avoiding negative-swap trades that roll over on Wednesday
4. Combining Technical and Fundamental Analysis
Smart traders don’t just look at charts—they also consider:
- Central bank interest rate policies
- Inflation trends
- Economic calendars
For example, if the Reserve Bank of Australia is hiking rates while the Bank of Japan maintains near-zero rates, AUD/JPY becomes even more attractive for swing trades with positive Funding Pips.
Final Thoughts
Swing Trading is one of the most effective strategies in Forex Trading, especially for those who want consistent returns without the stress of day trading. When combined with an understanding of Funding Pips and mastery of the Types of chart in MT5, it becomes even more powerful—allowing traders to earn passive income while waiting for price action to unfold.
By choosing the right currency pairs, managing risk, and leveraging Funding Pips strategically, swing traders can build a sustainable and profitable trading career.