Swing trading holds a position for several days to a few weeks to catch one move in price, usually planned on the daily and 4-hour charts. Your positions stay open while you sleep, so two things a day trader avoids become part of every plan: a holding cost for each night, and gaps over the weekend.
What you will learn
- How to plan a swing trade on the daily and 4-hour charts
- How to size a position for a wider stop
- How to estimate holding costs before you enter
- How to hold over a weekend inside the CMC Funded daily loss limit
Plan the trade on two timeframes
A swing trade takes its direction and levels from a higher timeframe and its entry from a lower one. A common pairing is the daily chart with the 4-hour chart, as the multi-timeframe analysis lesson explains.
Take an illustrative trade on EUR/USD. The daily chart shows higher highs and higher lows, and price has pulled back to 1.0850, an old resistance level that now acts as support. On the 4-hour chart, a bullish candle tests that level and closes at 1.0860.
You buy at 1.0860. The stop goes at 1.0790, below the last swing low and 70 pips away. The target is the recent high at 1.1000, 140 pips away, so the trade risks 1R to make 2R. You expect it to take one to two weeks. You check it once a day after the daily candle closes and set alerts at the stop and the target.
Size the position for the wider stop
A wider stop means a smaller position for the same dollar risk. On a $50,000 Classic account, 1% risk is $500, and one standard lot of EUR/USD is worth $10 a pip.
- Size is $500 ÷ (70 pips × $10) = 0.714 lots, rounded down to 0.71.
- Risk at the stop is 0.71 × 70 × $10 = $497.
- The gain at the target is 0.71 × 140 × $10 = $994.
A day trader risking the same $500 with a 12-pip stop would trade 4.16 lots. The swing trader holds about a sixth of that, because the stop has to sit outside several days of normal movement. The position size calculator does this sum for any symbol.
Count holding costs before you enter
Simulated trades carry trading costs, as they would on a live account: a commission when a trade opens and when it closes, a price markup on some symbols, and holding costs on positions kept overnight. For a swing trade, the holding cost is the one that grows with time. It is charged for each night the position stays open, and the rate differs by symbol and by direction, so a long and a short on the same pair can cost different amounts.
This example uses the sample rate from the spreads and trading costs lesson, $6 per lot per night, which is not a CMC Funded rate. On CMC Funded the rate is set for each symbol and each direction, and on some positions it is a credit, so look it up in the symbol details before you open.
- 0.71 lots cost 0.71 × $6 = $4.26 a night.
- Ten nights cost $42.60, about 4% of the $994 target.
- If weekend nights are charged too, as on many platforms, a trade that drifts sideways for three weeks pays for 21 nights. That is $89.46, or 18% of the $497 you risked.
Check the rate in the symbol details before you enter. Then set a time exit, such as closing the trade if it has not covered half the distance to the target within ten trading days.
Hold over a weekend inside the daily loss limit
A gap is when a market opens at a different price from where it last traded, and in forex most gaps happen over the weekend. Your stop fills at the first price available after the gap, which can be well past your level.
Holding over the weekend is allowed on CMC Funded, and holding costs apply. The daily loss limit is measured on equity and counts open positions, so a gap counts against the limit for the day it lands on, from the moment it shows in your account. Reaching the limit ends the account.
Take a $50,000 account, where the daily limit is $2,500 on Classic and $2,000 on Direct. You hold two positions into the weekend, long EUR/USD and long GBP/USD, each at 0.71 lots with a 70-pip stop. Both are bets against the US dollar, so they tend to move together. Both are close to their entry price at Friday's close.
Over the weekend the dollar jumps, and both pairs open 110 pips below your entry, 40 pips past the stops. Each stop fills at the open for a loss of 0.71 × 110 × $10 = $781, so $1,562 in all. That is 62% of the Classic limit and 78% of the Direct one, against a planned risk of $994 for the pair.
Before each Friday close, run a stress test. Assume every stop fills 50% further away than planned, add up the losses, and compare the total with a cap you set, such as half the daily limit.
- The two positions above would lose 2 × 0.71 × 105 × $10 = $1,491. That is over a half-limit cap of $1,250 on Classic and $1,000 on Direct.
- Closing one of them leaves $745.50, under both caps.
- Cutting both to 0.35 lots leaves 2 × 0.35 × 105 × $10 = $735, also under both.
News trading is allowed as well, so run the same test before a major release such as the monthly US jobs report.
Minimum trading days and no deadline
The minimum is 3 trading days in each Classic phase and 3 on Direct. If you open one or two swing trades a week, reaching three trading days can take a week or two. Neither route has a time limit, so a slow week never forces an extra trade. Waiting for price to reach your entry level costs nothing, because holding costs only start once you are in the trade. The rules page lists both limits for every account size.
Check your understanding
You risk $300 on a 60-pip stop on EUR/USD. What size do you trade, and what does a stop filled 90 pips from your entry cost?
$300 ÷ (60 × $10) = 0.50 lots. Filled 90 pips from your entry, the loss is 0.50 × 90 × $10 = $450.
At a sample $6 per lot per night, what does holding 0.40 lots for 14 nights cost?
0.40 × $6 × 14 = $33.60.
Two swing trades that tend to move together each risk $400 on a $25,000 Direct account. Do they pass a weekend stress test with a cap of half the daily limit?
No. The daily limit is $1,000, so the cap is $500. With each stop filling 50% further away, each trade loses $600 and the pair loses $1,200.
Key points
- Plan swing trades on the daily chart for direction and the 4-hour chart for the entry.
- A wider stop means a smaller position: $500 at risk on a 70-pip stop is 0.71 lots of EUR/USD.
- Holding costs grow with every night, so set a time exit for trades that go nowhere.
- A weekend gap fills stops beyond their level, and the loss counts against the daily limit on equity.
- Before each weekend, stress-test positions that move together, and cut size when they fail.
Next lesson: Plan position trades that last for weeks, with wide stops and small size
All trading is simulated. Rewards are based on performance and are not guaranteed.