What Are Swing trading?

A style where short term gains are targeted in a financial instrument is called swing trading. These gains are sometimes medium term too because the time span to hold a stock can extend from days to weeks and even months. Swing traders mostly look at technical analysis to make their profits and look for trading opportunities.   Fundamental analysis can also be used in addition to technical analysis to analyze the price patterns and trends more effectively. 

A Better look:

swing trading? the trader is involved in holding the position which can either be a long position or a short position. A long position means betting with the trend whereas a short position is going against the market. This position generally involves borrowing stocks and then betting them against the market. Hence, should be done carefully. 

The general time period for which the traders hold the position lasts generally for more than several weeks and can also range to weeks sometimes. 

In extreme cases when the market is volatile more than it should be, swing trades happen in active trading sessions too. 

The end term goal for swing trading is to make some money out of a price move. When a trader spots a volatile stock that is undergoing a lot of movement, they swing trade it. Some traders pick stocks that are less volatile.

In each case, the goal is the same. To predict when the price will move next. Traders enter a position and then make money as the market moves. The traders who are successful in swing trading exit the position as soon as they reach their target and move to the next opportunity. 

This is what sets apart the failures and successful swing traders. 

Difference between day trading and swing trading:

The time for which the trader holds the stocks is the main difference between day and swing trading. Swing traders usually hold their positions overnight and day traders tend to close their positions as the market closes. To keep it simple, the positions of a day trader cannot last more than a day while the swing trader can hold them for months.

Since swing traders are more exposed to risks because of the fact that they are holding their positions overnight, the risk is compensated by their position size which is kept lesser than that of day traders. Day traders generally take a position that takes more than 20% of their capital. 

Swing traders have a perk and that is, they have access to leverage of more than 50%. For example, a trader with $10,000 can play a bet of $20,000.

Swing trading strategies:

The swing trader is always inclined to the use of intraday chart patterns. Some of the patterns that a trader specifically looks out for include patterns like triangles, flags, head and shoulder patterns to name a few. 

It is the responsibility of the swing trader to engineer a trading plan that always keeps the profits in a loop. It is possible that not all the strategies will work all the time but it is also important that a trading strategy is created and abided by honestly. There is a chance of a risk and there is also a chance of reward in a trading strategy.

Swing trading has a combination of fundamental and technical analysis so that the price movements with heavy momentum can be pointed and the idle times can be deliberately omitted.

Swing trading results in an efficient use of the capital and returns that are higher than usual. It also comes in with drawbacks in terms of higher volatility and commissioned trades. 

The retail trader can find swing trading a little bit harder than usual. The professional traders who have more experience play around leverage, the information they receive. These traders are, however, limited to the use of  instruments that they can trade in.

Retail traders that have a knowledge of the stock market can take a lot of advantage from these things. So that they can create profits more effectively in an active market. 

Are you looking for a legitimate broker that can help you with day trading?? Your search ends here. We present you with the leading online broker T1markets. The broker has been in the market for a long time and has been providing better trading opportunities to its traders. The broker provides leverage that is out of the competition and spreads that no other broker can match.

T1markets has a strict no-no policy for commissioned trades and hence, attracts more and more swing traders and scalpers. The broker is also regulated by more than one regulating authority and the mere presence of two not just one of such authorities is a serious flex. 

The financial service provider helps the traders by providing three main trading accounts: silver, platinum and gold. T1markets has made itself stand out from a market filled with scam brokers and complex brokers. That end up taking a lot of money out of the traders pocket in the names of the various fees they ask. 

Bottom line

Swing trading needs focus more than focus itself. One wrong move and everything that took days to earn is lost in one single trade. Traders need to remember that it is not easy to swing trade and it is not at all advised for novices. They should still stick with traditional methods of trading.