Swing Trading

Swing trading involves holding a position over several days. It is a suitable tradig style for traders who are unable to monitor the market constantly during the trading session.

Swing trading refers to analyzing daily price charts for trading opportunities that last from a few days to several weeks.

It is the ideal trading style for many people. You do not need to stare at the screen for hours. You can do your analysis when you are free, at your own pace. And you get to keep your day job.

First, a swing trader should focus on essential price action tools like trend lines, support and resistance, and retracements.

After mastering these basic price action tools, you can safely move on to apply technical indicators. Prudent use of indicators adds value and convenience for a swing trader. Scanning and filtering a stock list by its indicator value is easy. Hence, you can generate shortlists of charts to study for a strategy that uses an indicator.

As a swing trader, you need to deal with price gaps. Price gaps are notoriously tricky for small retail traders with limited capital. A price gap against you and past your stop-loss order can bankrupt you overnight. While staying in denial about gap risk is the most common approach, it is hardly sensible. Instead, it is much better to recognize gap risk and try to manage it.

Swing trading might look easy, but it is not. You need a longer time to accumulate experience compared to a day trader who takes more trades. As a result of this slow feedback loop, you need to be more patient.

Take your time to develop the right swing trading approach for long-term success.