Prop Firms for Swing Traders

Complete Guide to the Best Prop Firm for Swing Traders

What is the most important thing for swing traders? Well, they seek to capitalize on long-term price movements, aiming to make a hefty profit in a span of a few days or weeks. For that, they also need proper trading conditions and large capital.

Prop firms fill this need of theirs, offering a good amount of trading capital at low costs, and appropriate trading conditions. But first, one might ask what swing trading is.

What is Swing Trading?

It is basically a trading strategy that involves taking advantage of short- to medium-term price fluctuations, or “swings”.

Unlike day trading, where positions are typically closed within a single trading day, swing traders aim to hold trades for several days or weeks. They tend to identify and profit from the “swings” or price reversals within the overall trend of a currency pair.

Swing traders usually look for currency pairs that are experiencing temporary price retracements or corrective movements within a trend. Once they identify an opportunity, they take a position and strategize to hold it for a relatively long time until they reach their profit target.

Traders also use various methods like Trend Trading, Breakout Trading, Fibonacci Retracement, Price Patterns, Support & Resistance Trading, Moving Average Crossovers, etc. to study the market movement.

Swing Trading vs Day Trading vs Intraday Trading

There are three main types of trading usually seen in the forex market. What sets each of these apart is:

DifferencesSwing TradingDay TradingIntraday Trading
Time HorizonPositions held for a long time. Days or weeks.Positions are taken & closed within the same trading day.Positions are taken & closed within the same trading day.
Profits FromCapitalizing on price movements of upcoming days or weeks.Multiple trades are executed throughout the day for short-term movements.Profiting from short-term price movements.
Profit Target & Stop LossLarger profit target & stop losses set.Smaller profit target & stop losses set.Positions are the same, just longer than day trading and shorter than swing trading.
TimeRequired less time commitment.Requires constant monitoring.Requires active monitoring daylong.

Basically, swing traders capitalize on long-term price fluctuations, typically days or weeks. Hence, automatically, they set larger profit targets and wider stop loss to handle price movements.

Pros & Cons of Swing Trading

As with all strategies, there are some potential advantages and disadvantages to swing trading strategies. Those could be summarized as follows:

ProsCons
Larger profit potential due to long-term holdings.Increase risk exposure due to potential market gaps or unexpected news events.
Flexibility in terms of time commitment.Longer patience is required.
Less stressful than other forms of trading.Potential for missed opportunities.
Potential impact of swap fees on trading profitability.

As we see in the table, there are multiple pros and cons to swing trading. Here’s where prop firms come in.

How Prop Firms Benefit Swing Traders

An age-old question is, “Are prop firms good or bad for swing traders?”

If we want to deep dive into this, let’s look at how prop firms are advantageous for swing traders:

  • Access to substantial capital at relatively very low costs.
  • Access to education, resources, and support.
  • A community of traders for news, networking, and learning.
  • Proper risk management features.

These are the core benefits of a prop firm for swing traders. As they take long-term positions, they need good amounts of capital to make any healthy profit and proper risk management.

But what about the disadvantages of prop firms? Are there any?

Though the disadvantages are very few, one could be daily and monthly equity-based drawdowns, and the other could be high costs through swaps, slippage, or commissions and fewer payouts.

How FundedNext is Best for Swing Traders

Here’s where FundedNext comes in. As a prop firm, it automatically offers all the core benefits to swing traders, and it took it a step further.

Benefits for Swing Traders from FundedNext

Focusing on solving the core problems of swing traders, FundedNext came up with the Stellar Package. It offers:

  1. Balanced-Based Drawdown: With any of the FundedNext funding models, even if traders make a profit/loss; their drawdown limit stays the same from where they started.

    For example, in an equity-based drawdown where 5% is the daily drawdown, if you bought a funded account of $100K, and made a profit of $10K you will now have $110K. Hence your drawdown limit will be 5% less than $110K, which is $104.5K.

    In the same scenario, in a balance-based drawdown, your daily drawdown limit still will be 5% less than $100K (your initial balance, hence named “balance based”), which is $95K.

    So simply if we see, you have more space to lose in a balanced-based drawdown package.

  2. Swap Free Account: No swaps (difference between bid & ask price), hence no cuts in profits.

  3. Low Commission: As minimal commission as possible in the market.

  4. No Time Limits: Traders have unlimited time to pass the challenge. No hurry.

  5. Subsequent Payouts: Offering bi-weekly payouts, ensuring smooth delivery of profits in the hand of traders.

  6. No Fakeouts: Traders, especially swing traders, often face challenges with misleading fake candlesticks.

    To combat this, FundedNext operates through its dedicated broker server ‘GrowthNext’, which emphasizes eliminating these fakeouts; thereby facilitating traders to make more informed and accurate trading decisions.

Basically, with this Stellar Package, FundedNext solves the disadvantages swing traders might face with prop firms and gives the best market conditions for swing trading.

Especially, a swing trader gets a wider scope of loss limits and frequent payouts with the most minimal costs possible.

Now it’s just a matter of time until swing traders around the world take advantage of it and make their profits soar.

Summary

Simply put, swing trading is simply a long-term position in forex trading, usually lasting days or weeks. Due to taking long-term positions, swing trading needs to have higher profit targets and wider loss limits. Also, a trader needs to have proper trading conditions with low costs and frequent payouts.

Though many prop firms in the market offer certain trading conditions that slightly cater to swing traders, only FundedNext offers total-catered trading conditions that fulfill all of the needs of swing traders.

Michael Scott
Michael Scott

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