Swing Trading Forex:
Backtest With COT, Seasonality and Valuation
Hold for days, check the chart once a day, let bigger moves do the work. Replay years of daily charts in an afternoon with the three tools swing traders read before they take a trade.
Price data from Dukascopy · COT from the CFTC
Slower, bigger, calmer
Swing trading holds positions for several days to a couple of weeks to capture larger price swings, usually on the H4 and Daily charts. It means far fewer trades, wider stops and targets, and only a check-in once or twice a day — which makes it the natural fit for anyone whose life does not allow screen-staring.
| Style | Hold time | Screen time | Cost per move |
|---|---|---|---|
| Scalping | Seconds to minutes | Constant | Spread is a big slice |
| Day trading | Hours | A session | Noticeable |
| Swing trading | Days to weeks | Minutes a day | Spread is a tiny fraction |
- Fewer decisionsDecide on the Daily, set the stop and target, walk away. Fewer decisions means fewer emotional mistakes.
- Wider stops, smaller lotsEach trade risks more pips, so position sizing keeps the risk fixed. You also hold through overnight sessions and news.
- Patience is the skillWith a handful of setups a week, forcing trades in between is where swing accounts leak. The strategy rewards waiting.
Three tools swing traders read first
All three sit in the Swing group of the indicator picker, one of the 86 indicators in the app.
COT index
Who holds the futures: commercial hedgers, large speculators and small speculators, from the CFTC’s weekly report.
- 0–100 over the last 26 weeks, or raw net contracts
- Commercials above 80 = bullish backdrop, below 20 = bearish
- 31 markets, reports back to 2000
Seasonality
The average path of the market through the year, from its daily history.
- Averages the last 10 complete years (2 to 30)
- The chip shows the typical move over the next 30 days
- Uses only the years before the one you replay
Valuation
Is the market cheap or expensive against the dollar, gold and US bonds?
- 10-bar rate of change against DXY, Gold and US T-Bond
- Rescaled to ±100; above +75 overvalued, below −75 undervalued
- Each reference can be switched off
Years of swing trades in one session
Swing trades are rare, so a sample of 100+ takes years of history. Replay compresses it into an afternoon.
Pick a market
Any of 105 markets on D1 or H4, starting at any date.
Add the tools
COT, Seasonality and Valuation from the Swing group.
31 markets with a COT report
Every market here is backed by a US futures contract. For USD/JPY, USD/CHF, USD/CAD and USD/MXN the positions are flipped, because the future is quoted the other way round.
- EUR/USD
- GBP/USD
- AUD/USD
- NZD/USD
- USD/JPY
- USD/CHF
- USD/CAD
- USD/MXN
- DXY
- Gold
- Silver
- Copper
- Platinum
- Palladium
- WTI Crude
- Natural Gas
- S&P 500
- Nasdaq 100
- Dow 30
- Russell 2000
- Nikkei 225
- VIX
- US T-Bond
- TLT
- Cocoa
- Sugar
- Coffee
- Soybeans
- Cotton
- Bitcoin
- Ether
How much of the day is done when you check
Swing traders check once or twice a day, so the useful question is how much of the day’s range already exists at that moment. Averaged across 4,162 trading days per pair.
| Instrument | 50% of range done by | 80% done by | Share built in Asia |
|---|---|---|---|
| EUR/USD | 08:00 UTC | 13:00 UTC | 47.9% |
| GBP/USD | 08:00 | 13:00 | 46.9% |
| USD/JPY | 06:00 | 13:00 | 59.4% |
| AUD/USD | 05:00 | 12:00 | 61.6% |
| Gold | 08:00 | 13:00 | 50.3% |
| US100 (Nasdaq) | 12:00 | 15:00 | 36.5% |
- An evening check sees a finished dayOn EUR/USD 99.0% of the daily range is in place by 21:00 UTC, so reviewing after the New York close means deciding on a complete candle.
- A morning check in Europe sees half of it47.9% of EUR/USD’s range is built by 08:00 UTC, and the Asian range survives the whole day on only 1.0% of days.
- Yen and Aussie pairs front-load their dayAUD/USD is half done by 05:00 UTC. A trader in Europe who checks at breakfast is reacting to moves that are already over.
Source: when the daily high and low actually form — Dukascopy bid-side hourly bars, 22 instruments. Figures are the share of each day’s eventual high-to-low range already traded by that UTC hour.
What these tools are not
- COT is weekly and published three days late — a backdrop for swing trades, not an entry signal.
- In holiday weeks the CFTC releases on Monday instead of Friday; those reports show up to three days early in a replay.
- Seasonality needs two complete years of history before it draws, and it is an average, not a forecast.
- Stocks, crypto CFDs and most crosses (EUR/JPY, GBP/JPY…) have no COT report.
Swing trading forex — FAQ
What is swing trading in forex?
Swing trading holds positions for several days to a couple of weeks to capture larger price swings on the H4 and Daily timeframes. It involves far fewer trades than day trading or scalping, uses wider stops and targets, and only needs a check-in once or twice a day. That makes it well suited to people with jobs, and it keeps transaction costs small relative to each move.
Is swing trading better than day trading?
Neither is universally better; they suit different lives and temperaments. Swing trading needs less screen time, is less affected by spread, and produces fewer decisions, but each trade risks more pips and you must tolerate holding through overnight moves and news. Day trading offers more control and faster feedback at the cost of intensity and higher relative costs. The right choice is the one you can execute consistently.
How do I backtest a swing trading strategy?
Replay Daily or H4 charts and take every setup your rules define. The main challenge is sample size: because swing trades are infrequent, reaching 100 or more requires covering a long span of history, often a few years. A simulator lets you fast-forward through the quiet periods so you can build that large sample in a single session rather than waiting months in real time.
What is the COT index and how do swing traders use it?
The Commitments of Traders report is the CFTC's weekly breakdown of who holds futures: commercial hedgers, large speculators and small speculators. The COT index places each group's latest net position inside its range of the last 26 weeks, from 0 to 100. Swing traders watch commercials above 80 as a bullish backdrop and below 20 as a bearish one. In FxBacktest a report only appears from its Friday release, so a replay never sees it early.
Does seasonality work in forex?
Seasonality shows how a market has tended to move at this time of year, averaged over past years. It is a tendency, not a forecast, which is why it is worth backtesting rather than trusting. FxBacktest averages only the complete years before the one you are replaying, so the curve you see is the one a trader had at the time.