What is swing trading?

What is swing trading?

Blog Article

Swing trading is a short- to medium-term trading strategy where traders aim to capture "swings" in asset prices—typically holding positions for a few days to a few weeks. It sits between day trading (very short-term) and long-term investing.

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Key Features of Swing Trading:

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  Time horizon: Trades usually last from 2 days to several weeks.

  
  


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  Goal: Profit from short-term price movements, both upward and downward.

  
  


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  Tools used:

  
  
  
  
  
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    Technical analysis (charts, patterns, indicators like RSI, MACD)

    
    
  
  
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    Sometimes fundamental analysis (earnings, news)

    
    
  
  
  
  


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  Asset focus: Commonly applied to stocks, but also used for ETFs, options, forex, and copyright.

  
  

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Advantages:

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  Less time-intensive than day trading.

  
  


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  More opportunities than long-term investing.

  
  


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  Takes advantage of short-term volatility.

  
  

Risks:

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  Subject to overnight and weekend risk (e.g., news events causing gaps).

  
  


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  Requires disciplined risk management (e.g., stop-loss orders).

  
  


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  May involve higher trading costs due to frequent buying and selling.

  
  

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Example:

A swing trader notices a bullish breakout pattern on a stock chart. They enter a trade and plan to hold it for about a week, aiming for a 10% price increase. They set a stop-loss 5% below entry to limit risk.

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