Swing trading is a short to medium-term trading strategy in financial markets where a tradable asset is held for one or more days in an effort to profit from price changes or swings'. The goal of swing trading is to capture a chunk of a potential price move. Swing traders typically hold a position either long or short for more than one trading session, but usually not longer than several weeks or a couple of months. Swing trading can be profitable and provide a good perspective to learn about both the short-term and long-term market movements, but it requires hard work to manage trades, which means traders might miss out on potential profits due to market moves.
Swing traders use technical analysis to determine when to enter and exit a trade, studying price trends, chart patterns, and other indicators to identify potential price movements. They also use a set of mathematically-based objective rules for buying and selling to eliminate the subjectivity, emotional aspects, and labor-intensive analysis of swing trading. Identifying when to enter and when to exit a trade is the primary challenge for all swing trading strategies. However, swing traders do not need perfect timing to make a profit. Small consistent earnings that involve strict money management rules can compound returns over time.
Swing trading is a good trading style for beginning traders to get their feet wet, as it offers significant profit potential for relatively low risk.
