Four of the Best Strategies for Swing Trading
Swing trading is a style employed by many traders looking to combine the intensity of day trading with the strategic planning of long-term investing. In this article, we?ll be taking an in-depth look at four of the best strategies for swing trading, offering information on entry criteria, stop-loss placements, and taking profits.
What Is Swing Trading?Swing trading is a style of trading that aims to profit from market movements over the course of a few days to several weeks. Unlike day trading, where positions are almost always opened and closed within the same day, swing traders hold positions for more than one day. They can be thought of as a happy medium between short-term day traders and long-term position traders/investors.
Generally speaking, swing traders will attempt to capture the bulk of short-term fluctuations within a broader trend. In other words, they attempt to buy an asset at the bottom of a ?swing? and sell at the top, capitalising on temporary changes in price.
One of the main benefits of using swing trading techniques is the potential for significant returns over a relatively short period. The extended holding period, compared to shorter-term styles, allows for larger price movements to play out.
Moreover, because swing traders typically pay the most attention to the 1-hour, 4-hour, daily, and weekly charts, they can manage their trades without needing to constantly monitor the market.
However, swing trading methods aren?t without their disadvantages. The extended holding period exposes swing traders to overnight and weekend market events, which could lead to potential losses or even a ?gap? up or down that doesn?t trigger the trader?s stop loss. Additionally, the importance of technical analysis in swing trading can?t be understated; accurately predicting price swings is crucial for success, so there may be a steeper learning curve associated with this form of trading.
Read more...This article represents FXOpen Companies? opinion only, it should not be construed as an offer, solicitation, or recommendation with respect to FXOpen Companies? products and services or as financial advice.
