What is Swing Trading ?

Swing Trading Short Position - TATASTEEL

Swing trading is a trading technique that attempts to capture single swing (or "one move") in a stock (or any financial instrument) over a period of a few days to few weeks. Swing traders primarily use technical analysis to look for trading opportunities.

Swing trading involves holding a position either long or short for more than one trading session, but usually not longer than several weeks or a couple months. This is a general time frame, as some trades may last longer than a couple of months, yet the trader may still consider them swing trades.

Swing traders will often look for opportunities on the daily charts, and may watch 1-hour or 15-minute charts to find precise entry and stop loss points.

Some Simple Swing Trading Strategies are
  1. Trend Trading
  2. Range Trading
  3. Break Out Trading

Swing Trading Pros

  • Requires less time to trade than day trading.

  • Maximizes short-term profit potential by capturing the bulk of market swings.

  • Simplifying the trading process, as need to make trades based exclusively on technical analysis.

  • Profit from OVERNIGHT GAPS.

  • Traders can avoid larger losses unlike long term investors.

Swing Trading Cons

  • Trade positions are subject to overnight and weekend market risk.

  • Abrupt market reversals can result in substantial losses.

  • Swing traders often miss longer-term trends in favor of short-term market moves.

  • Need more capital as compare to day trading.