Price Swing
Also called Swing, Swing leg, Swing move, Price leg
A price swing is one move in a single direction, from a turning low to a turning high or the reverse. You measure it in pips from one swing point to the next.
Every stop, target and pullback entry you place is measured against the last swing. If you misread the swing, your stop can end up inside normal movement, or your target can sit beyond where price has any reason to go.
Measuring a price swing from point to point
An up swing starts at a swing low and ends at a swing high. A down swing does the opposite. The size of a swing is the distance between those two prices, counted in pips.
Pick one rule for what counts as a turning point and stick to it. A common rule is that a swing high is a candle whose high is above the highs of the two candles on each side, and a swing low is a candle whose low is below the lows of the two candles on each side. Without a rule, you will count every small wiggle as a swing. Those wiggles are market noise, and they make your measurements useless.
Measure from wick to wick, not from close to close. Wicks are what trigger your stop and reach your target, so they are the prices that matter. The up swing in the example below is 100 pips from wick to wick but only 85 pips from close to close (1.1004 to 1.1089).
Swings also depend on the timeframe. A full swing on a 1-hour chart may be one small leg inside a daily swing. Swing traders usually aim to catch one swing at a time on 4-hour or daily charts. Measure on the chart you trade, then check the swing direction on the next higher timeframe.
Turning one swing into a stop, target and lot size
The figures here are an illustrative example on EUR/USD with a $5,000 account. Price swings up from 1.1000 to 1.1100, so the up swing is 100 pips. The 1.1000 low is the start of the visible move: the candles before it are off the chart, so you cannot check it against the rule here. Price then pulls back to 1.1035. That pullback is 65 pips, or 65% of the swing.
Use a fixed rule for how much risk a pullback allows, based on how much of the swing it gives back:
- Pullback under 50% of the swing: normal risk (1% in this example).
- Pullback of 50% to 78%: half risk.
- Pullback beyond the swing low: no trade.
This 65% pullback falls in the middle band. It is deep, but it held 35 pips above the 1.1000 swing low, so the up-swing structure is intact. You take the trade at half risk, 0.5%, and aim no further than the last swing high.
The pullback low is confirmed when the second candle after it closes at 1.1063 without going lower, and you buy there. Your stop goes just below the pullback low, at 1.1030. Your target is the previous swing high at 1.1100. The chart below shows both swings and where each level sits.
You risk 33 pips to make 37, a reward to risk of about 1.1. At 0.5% risk, and with one standard lot on EUR/USD worth $10 per pip, the steps below give you the order size, rounded down so you stay within your risk.
Reading trend strength from consecutive swings
One swing tells you a distance. A series of swings tells you who is in control. Compare each new swing with the one before it.
| What you see | What it suggests | What to do |
|---|---|---|
| New up swing longer than the last, shallow pullbacks | Buyers still have momentum | Pullback buys fit the trend |
| New up swing shorter, pullbacks getting deeper | Buyers are tiring | Trade smaller or take profit sooner |
| Pullback breaks below the last swing low | The up-swing structure is broken | Stop looking for buys and wait for new swings |
The sketch below shows the middle row: a shorter swing followed by a deeper pullback.
A common mistake is to see one long candle and call it a new swing. A swing is only confirmed after price turns and leaves a swing point behind it.
Spotting and measuring swings on your chart
A zigzag-style indicator joins swing highs and lows for you. Its depth setting controls how many candles must separate one swing point from the next, so set it to match the turning-point rule you picked rather than letting it count noise.
A measuring tool dragged from swing low to swing high gives the distance in pips, and horizontal lines at the last swing points keep your stop and target in view.
Checks before you trade a swing
- Is the turning point confirmed? A swing low that is still forming can be broken.
- Is your stop beyond the swing point, not exactly on it? Wicks often touch the exact level and then reverse.
- Does the distance to the last swing point pay enough? If it is smaller than your stop, skip the trade.
- Does a stop beyond the swing point force a lot size below your platform's minimum? If so, move to a lower timeframe or skip the trade.
- Does the higher-timeframe swing point the same way? Trading against it means you are aiming at a smaller move.
- Is major news due while you hold the trade? News can stretch a swing well past its usual size.
FAQ
How long does a price swing last?
A swing has no fixed length in time. It runs until a new turning point forms, so count it in candles on the chart you trade. In the example, the up swing took 9 candles and the pullback 4. If a pullback starts to last much longer than the swing before it, treat that as a sign the move is slowing.
Can I trail my stop under new swing lows?
Yes, if you hold the trade past your first target. Each time price makes a new higher swing low and two candles close without going below it, move your stop just under that low. Only ever move the stop in the direction of your trade, never back.