A brief introduction to swing trading strategy
One can define swing trading to be a speculative trading strategy in which case security will be held for a couple of days to make sure that it is feasible for investors to make a profit from the “swings” or the fluctuations in price.
Practical Guide To Swing Trading PDF
A swing trading strategy emphasizes reducing losses within a short time and considering smaller profits in short-term trends.
Even though the goals are smaller, they can help in compounding into remarkable annual returns if performed consistently for some time.
A swing will be low once the price makes a low and it will be followed instantly by a couple of higher lows.
On the contrary, a swing will be high once the price makes a high and it is followed by a couple of consecutive lower highs.
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Swing trading vs. day trading
The term “day trading” implies selling or purchasing stocks within a day.
Moreover, it might imply opening as well as closing the positions within several seconds.
The primary difference between swing trading and day trading is the period of time the position is held by you.
Day traders are going to purchase and sell several assets with the trading day to make use of small movements in the market.
On the contrary, the stocks will be held by swing traders for several days or even weeks.
While the leverage happens to be twice the investment when it comes to swing trading, the leverage is generally 4 times the investment in day trading.
Although the duration of the trade might be only 30 minutes or less, it might likewise last for more than one day.
Swing trading strategy types
You will come across different types of swing trading strategies some of which we have mentioned below.
• Fibonacci Retracement – We make use of this tool for detecting the potential levels of resistance and support in the price movement of an asset.
They will help the traders to figure out optimal price entry areas while swing trading.
There is a tendency for prices to retrace in a trending market prior to resuming the original trend.
A stock is going to retrace to a previous price point for the short term and following this, it will go on moving in the identical direction afterward.
• Reversal – In this case, the traders are going to enter the trade in the reverse direction of the earlier trade.
The traders will enter the trade in the reversal direction after identifying the possible trend reversals in the price of the stock.
In case the asset is in an uptrend and is depicting symptoms of a possible reversal, traders are going to look for opportunities to get into short positions.
• Breakout strategy – In this case, the trader is going to take his position within a specific trend as soon as possible to take advantage of the market movement.
The traders will look for possible breakouts in the movement of a stock price.
For instance, in case a stock is displaying symptoms of breaking above the levels of resistance while moving between the resistance and support range, he will make an effort to get into a long position.
On the other hand, in case the asset is being traded within a specific range while depicting symptoms of breaking below the level of support, it would be advisable for the traders to get into short positions.
Practical Guide To Swing Trading PDF Details
|File Size||1.80 MB|
|Category||Stock Market- Trading|
|File name||Practical Guide To Swing Trading PDF|
|No. Of Pages||47|
|PDF Quality||Very Good|