What Is Swing Trading?

If you understand the stock market basics and have any experience in this area then you have probably heard the term swing trading. But what is this, and how does a swing trading system work? Swing trading is an investment style which is used for short term goals and profits. Unlike traders who buy stocks and hold them for a long time, swing traders usually only hold investments for between one and four days before the stocks are sold at a profit. Day traders may practice this type of investing. The goal is to find stocks that will see gains within the next few days, and this means a lot of research that is done frequently. If you are going to practice this type of trading then it is important to learn how to spot the stocks with the best potential for the highest short term gains.

Swing trading is better suited to individual investors, because large companies and investment firms that buy large amounts of stock can not be as effective in such a short time period. Technical analysis is commonly used by these investors to determine which stocks have the most short term price momentum, because these are the most profitable for a swing trading strategy. The trends and patterns of the price is what interests these traders, and the actual value of the investment is not a main concern. The aim of swing trading is to exploit any short term movements of the price, and to make a profit from these fluctuations.

The information supplied in this article is not to be considered as medical advice and is for educational purposes only.