What is Swing Trading?
Swing trading is a style of trading that attempts to capture short- to medium-term gains in a stock (or any financial instrument) over a period of a few days to several weeks. Swing traders primarily use technical analysis to look for trading opportunities.
Swing traders may utilize fundamental analysis in addition to analyzing price trends and patterns.
Why Swing Trade?
Swing Trading is a strategy that focuses on taking smaller gains in short term trends and cutting losses quicker. The gains might be smaller, but done consistently over time they can compound into excellent annual returns. Swing Trading positions are usually held a few days to a couple of weeks, but can be held longer.
Benefits of Swing Trading
- Investing in large-cap stocks that are actively traded on the major exchanges and, as a result, have regular price swings is the first strategy required to benefit from swing trading.
- To gain the maximum benefit from swing trading, it is important to invest in market sectors that do not tend to go profits or loss in the long term.
- Another important strategy that helps investors benefit from swing trading is using exponential moving average (EMA) while making any investment.
- Swing traders must pay attention to the direction of movement of the baseline of an asset to invest in it at the right time and reap the benefits.
- Closing trade on a generally profitable position instead of reaping the maximum profit possible is another essential strategy for benefiting from swing trading.
- Swing trading is less time-intensive than day trading.
- Swing trading provides the maximum short to medium term profit potential as it capitalizes on the most significant portion of market swings possible.
- Swing trading requires less analysis than a day or long term trading, allowing for more simplified trading.
- Swing trading can be very profitable
- You can trade part time trader
- The time commitment is not much in swing trading
- Swing traders are often unable to reap the maximum profit possible from a particular share or instrument.
- Swing traders are less likely to profit in either bear or bull markets.