Stock Swing Trading

Learn the secrets to stock market swing trading

Swing trading is a technique used to trade stocks, index funds, or commodities when they are bought or sold at or near the end of an up or down price swing. These pricing swings are caused by regular price volatility seen on a daily and weekly basis.

A swing trade strategy is most likely to be open longer than 24 hours, so it is a much different strategy than a “buy and hold” investment. Traders that use swing trading techniques follow pricing changes that are caused by either optimism or pessimism in an instrument. Traders profit using these techniques by buying on pessimism, and selling as the prices go up on optimism. These price swings can change on an hourly basis, which provides for many opportunities for profit.

Investopedia defines swing trading as:

To find situations in which a stock has the extraordinary potential to move in such a short time frame, the trader must act quickly. 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 quickly. The individual trader is able to exploit such short-term stock movements without having to compete with the major traders.

As with all trading strategies, there are risks involved in the stock market, and there is no such thing as a guaranteed return. Consult a financial advisor before undertaking any investment strategy.