What is Swing Trading

What is Swing Trading

swing trading

The term refers to the various styles of swing trading stock, commodities or index. This trading is a kind of practice where the trader buys or sells the instrument at or close to the end of a down or up price swing in the commodity. This fluctuation is caused either due to daily price volatility or weekly price volatility. Knowledge of these styles helps will help you become a profitable trader and put you on the path of a successful trading profession. There are lots of swing trading strategies out there, but finding profitable ones is even more difficult.

How long do swing traders hold stocks for

The time limit that is usually involved in holding the instrument by the trader is 1-4 days. It is most likely less than a week in any case. The currency or the stock which the trader is dealing in swings from one price level to another. A swing trader rides on this oscillation or swing that the market makes on the stock.

The stock research you will be doing is looking back at past trends allowing you to come up with an informed decision on what to do. That way you can take a calculated risk of how long the trend will last in an uptrend or how short you need to go in a downtrend to maximize your profits.

What programs do swing traders use?

The use of end-of-the-day charts software and the information provided by your broker is also used to make your stock trading decisions. This eliminates the need for a direct-access system, being bound by your stocks and waiting for the end end of the day trading.

How many shares do swing traders trade?

Most swing traders trade in blocks of 1000 shares at a time, but this is more of a guideline than a rule. Besides, these traders will hold only around ten positions at a time. The type of stocks a swing trader will choose for their stock picks is those that can be moved quickly or at least shortly. Below is a list of criteria used by the swing trader to analyze the stocks and decide on the stock pics.

Volume and Liquidity

Wanting stocks that can move quickly, as they work with actively traded and large stocks that are easier to trade.


This is the uptrend and downtrend mentioned previously. Stocks that are following these trend patterns rather than a straight one are what swing traders are looking for.


The volatility of stock shows that it has a lot of movement. This another criterion a swing trader uses because the traders can quickly make a profit with a volatile stock.

Sector Selection

When stocks are in the stable sector, the swing trader finds it more comfortable to trade, but in the weak sector, profits are made by weakening the price.

Tight Spreads

Tight spreads mean small spreads in the bid and the ask of a stock. Swing traders want the smaller spread because they can make more profit from it. With a broader spread, a trader looks to have lower profits. So the tighter the better.

Rounding it all up

When used correctly, swing trading is an excellent strategy used by many traders across different markets. It is not only used in the Forex market but also it is a crucial tool in futures and equity markets. Swing traders take the skills that they learn through technical analysis and can even parlay these skills into various options strategies. The short-term nature of swing trading sets it apart from that of the traditional investor. Investors tend to have a longer-term time horizon and are not traditionally affected by short-term price fluctuations.

As always, one must remember that swing trading is only one strategy and should be utilized only when appropriately understood. Like any trading strategies swing trading can be risky and conservative strategies can turn into day trading strategies quite quickly. If you plan to employ a swing trading strategy, ensure that you fully understand the risks and develop a strategy that will be able to allow you to generate maximum percentage returns on your positions.

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