Swing Trading Advantages
 Submitted By Michael Michaud
What is Swing Trading?
Swing trading is trading any financial instrument of stocks, options, forex, futures, commodities, within a 1 to 5 day time frame or possibly longer if you think you can carry the trade over the weekend which is possible in trending markets. For example taking a long or short position on Monday or Tuesday and closing it on a Thursday or Friday of the same week. Swing trading is about trying to capitalize on short-term price price fluctuations of momentum and strength. Fundamental valuation is normally not considered with swing trades, but there are trading algorithms that sometimes include fundamental valuations in their trading models. The price, its trend, chart pattern, and sometimes valuations are what's primarily focused on when deciding to buy or sell with a swing trade.
Swing Trade Shorter Time Periods
Swing trading is normally done in shorter time periods and decisions to take buy or sell action are taken more quickly than position trading or longer term investing. Swing traders are mostly professional and online day-traders. Big investment institutions trade positions sizes very large that normally prevent them from moving in and out of stocks as quickly compared to day-traders. Individual day-traders can take advantage short-term stock movements where big traders cannot so easily.
Short Term Price Reversals and Momentum Trades
Swing trading can be applied to short-term price reversals caused by daily or weekly price volatility, and or momentum trend trades. Profit from up and down markets with swing trading.
Swing Trading Strategies and Methods
There are various swing trading strategies and methods that can provide low-risk and high-reward returns. Using moving averages and price oscillator indicators is a common method. Elliottwave Trading Software can also automatically find short-term swing trading candidates with its 5 wave main price movement sequence, and its ABC correction pattern recognitions. Technical and or fundamental algorithms programed into trading software are being used quite frequently now providing automatic entry, stop-loss, and take profit price target points to trade by. The most important thing to know about any investing trading strategy and method is that there is no foolproof mathematical model or algorithm that will always profit. So as long as you don't over-leverage with proper position sizing, and your using stop-loss, you won't get into financial trouble and burn up your trading account.
Perfect Entry Price Timing Not Required To Profit
Identifying whether a market is currently trending higher or lower, or trading sideways and when this will change is a challenge for many swing trading and long-term trend following trading strategies. Swing traders do not need perfect timing to buy at the bottom, and sell at the top of price oscillations. Small to big consistent earnings that involve strict money management and stop-loss rules can compound returns significantly over time. The most important is to understand that there is no foolproof mathematical model or algorithm that will always work so only use them as research tools not decision making engines.
Swing Trading Rewards & Risks
Up or downward trending markets provide the best profit rewards for swing traders. Trading range markets and sideways price movements are generally more risky for swing trading. By using proper position sizing or another term for it called leverage, and stop-loss rules, swing trading in trading range markets can reduce possible losses. If your trading on leverage or margin, don't over-leverage your account, and stick to stop-loss and you will live to trade another day when you do take some trading losses.
Click the link below for more information and resources on swing trading.
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