What is Swing Trading?

Swing Trading is a term used to describe a trading strategy where investors expect to profit from a certain financial instrument in a short period of time. In essence, investors buy and sell assets when indicators show an increase or decrease in price. They hold the said asset, usually between one day to two weeks, only to sell it for a profit.

Swing traders rely on short-term trends, price fluctuations, or “swings” within the market to make their investment decisions and maximize profit. 

When looking at each individual investment it may seem that, at first glance, profits aren’t substantial, however, stable and small gains can add up to a large return on investment each year.

Investors that choose this technique generally look for trading opportunities by utilizing technical analysis which brings charted technical indicators. Although, it’s worth keeping in mind that technical analysis has been critiqued for lack of accuracy. Either way, swing trading can be risky and is often compared to being somewhere in the middle of day trading and trend trading. 

There are many techniques within swing trading such as buying the pullback, playing the uptrend, and many more.

Success greatly depends on constant monitoring of the market. 

Just like all investors, swing traders start by choosing an appropriate financial instrument such as a security, a stock, or an asset.

Companies with a market capitalization value of over $10 billion, also known as large-cap, are appealing to all investors. Swing traders are no different. 

Large-cap company stocks within an active market usually experience price fluctuations that reach extreme highs and lows. Swing traders change which side of the market they’re in based on how the stocks change direction.

Swing trading is between bulls and bears. Generally speaking, stocks will move in one direction for a long period of time not depending on whether it’s a bull or bear market. This means that implementing a long-term strategy can bring the most success. 

When it comes to the crypto sector, swing traders utilize countertrend techniques. Price reversals allow them to maximize their gains close to the trading range’s edge. 

Support and resistance levels are what swing traders should have a full grasp on as they can be the deciding factor of success. In order to succeed, swing traders must search for opportunities on the daily and 4-hour charts, only then will they be able to identify an accurate entry point by looking through 1-hour and 15-minute charts.