Swing trading is a market trading technique that aims to profit from short to medium-term price changes in stocks, commodities, and/or currencies over a period of days or weeks.
What Is Swing Trading?
Swing trading is a trading technique in which investors acquire stocks or other assets and keep them for a short length of time, typically a few days to several weeks with the expectation of making a profit.
The swing trader’s objective is to profit from any potential price fluctuation, or “swing,” in the market. Individual profits may be less since traders are more focused on short-term trends and try to reduce losses as soon as possible. Small profits over time, on the other hand, can add up to a substantial yearly return.
The first step in swing trading success is selecting the appropriate stocks/currencies/asset for investment. Large-cap companies, which are one of the most frequently traded on the main exchanges, are the greatest prospects for swing traders. These stocks will fluctuate between widely defined high and low extremes in an active market, and the trader will ride a wave in one way for a few days or weeks before switching to the other side of the trade when the stocks change direction.
A common swing trading technique is “buying the pullback.” Breakouts of resistance levels frequently result in an increased buying activity. Traders who missed the dip can wait for a downturn and use limit orders to purchase near the first support level.