Swing trading is a trading technique that traders use to buy and sell stocks when indicators point to an upward (positive) or downward (negative) trend in the future, which can range from overnight to a few weeks. Swing trades aim to capitalize on buying and selling the interim lows and highs within a larger overall trend.
Traders use technical indicators to determine if specific stocks possess momentum and the best time to buy or sell. To exploit the opportunities, the traders must act quickly to increase their chances of making a profit in the short-term
Financial markets typically have three prevailing long-term trends: the bear market, the bull market, or somewhere in-between. Swing trading strategy is different under each environment
The first key to successful swing trading is picking the right stocks. There’s two key variables to consider when choosing the stocks to swing trade: liquidity and volatility.
The best candidates are large-cap stocks, which are among the most actively traded stocks on the major exchanges. In an active market, these stocks will high transaction volume. If a stock as poor liquidity or doesn’t have deep action in a broker’s trade book, it may be difficult to sell or may require substantial price discounts to relinquish the shares
How do you identify stocks for swing trading?
When choosing a stock to swing trade, it’s helpful to find relatively calm stocks, meaning they don’t exhibit excessive price moves called volatility. Ideally, stocks trending slightly up or down, with steady price action, but without too much volatility are best.
Simple Rules of Swing Trading
Cap Your Account. While you can make money in swing trading, you can lose it just as quickly!
Look for Volatile Market
Be Consistent
Know the Market Phases
Know Support and Resistance Levels
Know Your Entry and Exit Points
Use Stop-Loss Orders
Cut Your Losses.
Summary
Swing trading is the best deal for beginner traders. It requires less skill and expertise
