what is swing trading

What is swing trading :

A swing trading is a speculative trading strategy in financial market where tradable assets is held for between one and more days in an effort to profit from price changes .A swing trading position is typically held longer than a day trading position,but shorter than buy and hold investment strategies that can be held for months or years. Profits can be sought by either buying an asset or short selling .

Methods of swing trading 

Using a set of mathematically based objective rules for buying and selling is common method for swing traders to eliminate the subjective, emotional aspects, and labor-intensive analysis of swing trading. The trading rules can be used to create a trading algorithms.

Sampler rule based trading approaches include Alexander elder strategy, which measures the behavior of an instrument price trend using three different moving average of closing price. The instrument is only traded long when three averages are aligned in an upward direction, and only traded short when the three averages are moving downward. 

Identifying when to enter and when to exit a trade is the primary challenge for all swing trading strategies. However, swing traders do not need perfect timing to buy at the very bottom and sell at the very top of price oscillations to make profit. Small consistent earning that involve strict money management rules can compound returns over time. 

Risk in swing trading 

Risk in swing trading are commensurate 

With market speculation in general. Risk of loss in swing trading typically increases in trading range.

Breakdown swing trading 

The trader must act quickly to find situations in which a stock has the extraordinary potential to move in such a short time frame. Therefore, swing trading is mainly used by at home and day traders. Large institutions trade in sizes too big to move in and out of stocks.