Swing Stock Trading Strategies

There lie differences between day trading and swing trading. The Swing trader does not look to make profits every day. It is a type of trading where the type of investment is short-term, but the duration varies from three days to as long as 3-4 weeks.


It is especially difficult and too tough to ask beginners to go about the day trading process with enough confidence. Similarly, part-timers in the market simply do not have the time to sit before the computer screen for hours to notice the market movements all day long. It is for these people that swing trading is found to be the most beneficial.


It must be noted that since swing traders are not long-term investors in the market, they simply cannot expect to make their profits on just any stock. For this reason, stocks listed within the three exchanges NYSE, AMEX and NASDAQ are the ones that most swing traders tend to pick. Why do they do so? Stocks in these 3 exchanges have the best chances of going very high or very low on a certain day. If this is the case with swing traders, then they do not have the obligation to hold stocks for a long period of time. (Though they might, if needed, or if they wish to hold the stocks for further high prices.)
There is an interesting technique in trading which is perhaps applicable only to swing trading strategies. The trading type is such that a fully Bull market or a fully Bearish market does not suit Swing trading. The market has to be relatively stagnant, a condition that most swing traders will relish. Short-term movements in the market will be best reflected under this condition and as such, the swing traders will have maximum chances of earning their profits.
A distinctive feature of short-term changes in the market is the periodical fluctuations in stock prices. This is what swing trading strategies will utilize most. Stocks are more prone to fluctuate within a specific range and it is imperative for swing traders that they take advantage of these changes. This is a place where there might not be trading done on a daily basis, but always on a short-term basis for a few days to a few weeks.


However, this is not long-term investing and hence, you simply cannot forget about the stocks once bought.
Swing trading is preferred by some people over other forms of trading because:
   1. Low Risk.
   2. Shorter Investment Period involved.
   3. Easier to deal with for newcomers and part-timers.


The right approach to swing trading is always going for stocks of larger companies, otherwise known as Large Cap stocks. They are likely to show greater fluctuations. The choice of the right stock is an inseparable part of swing trading strategies. First, the trader needs to follow a certain stock for some time before he decides to buy them. In case this stock reverses its trend, the trader simply fixes his attention to another stock.


Another chief factor behind swing trading profits is the right market condition. As mentioned before, the market that is rising or falling is least suited for swing trade since in such a market most stocks will move in a single direction. The best strategy for such markets is long-term trading. Swing trading happens best in comparatively stable markets where the short-term changes are reflected in the rise and the fall of the index even when their value remains roughly the same. In such market conditions, at first the indices rise and then fall for some days in an alternate manner. This is where swing trade is most appropriate.




Video Presentation: Advantages and Disadvantages of Swing Trading






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