What is Swing Trading?
Swing Trading can be explained as a method of basic trading in which positions are held for an extended period of time, rather than just one day. Any significant changes in stocks of large corporations and enterprises are the result of a very lengthy process that needs several weeks, or even years. Changes in prices also take a long period of time. Hence, investors and experts of the stock markets are typically swing traders.
In reality, swing trading is a very complex concept that has numerous aspects that need to be considered to become a successful swing trader.
Comparison with Other Types of Trading
Swing trading is often called the middle ground between day trading and trend trading. Day trading means the trader holds a stock for just a single day. It can be held for a few hours or even a few seconds, but not more than a 24-hour window. On the other hand, thorough research and long-term benefits are considered in trend trading.
In the case of the swing traders, they hold a specific stock for a certain period of time, usually a few days to three weeks. The stocks are ultimately traded based on their intra-week or month oscillations.
Since swing trading lies between the market extremes of a bear market and raging bull market, it can prove to be extremely challenging as sometimes, even the active stocks do not show any oscillations, and the price can remain stagnant for an extended period. Whereas, in the bear or bull market, momentum is gained towards one trend only for a longer time period. It confirms the theory that the best way of swing trading is through long-term strategy because your stocks don’t need to change immediately, so you have to wait for a specified period.
Problems and Profits of Swing Trading
A major issue associated with swing trading is that success can only be achieved by identifying the right stocks and the right market for trading. Even after making the right choice initially, any market can experience down-trend, which can result in losses for a swing trader.
Profits can be gained via swing trading when a trade is an exit at either the maximum or the minimum channel line without being excessively accurate, which can cause severe losses in the investment.
Traders usually wait for a stock to exhibit a strong trend in a strong and active market. On the other hand, in a weak market, profits are usually extracted before direction fluctuates, and the line is hit.
If you are a new trader and want to gain some experience and expertise in the field of trading, then swing trading is one of the best trading methods. It can provide some massive benefits and profits if done correctly, even when you are a new trader. Therefore, you should read about swing trading as much as you can and start investing in swing trade stocks to enjoy the possible benefits of swing trading.