Swing Trading is a style of trading which attempts to capture gains from a particular stock within a short period of time. The time generally would be one to four days or two to three weeks. Swing Trading is a trade which resembles day trading or trend trading.

Swing trading is a different challenge when it is compared with the two market extremes, the bull market environment and the bear market environment. In a bull market or bear market, the momentum carries stocks in one direction for a long period of time to ensure the best strategy to trade.

To understand more clearly the strategy of swing trading you need to understand Up Trend, Down Trend, Long Swing Trades and Short Swing Trades:

Up Trend: The higher highs and higher lows in a series is an uptrend. In the trend, often the high of the last swing will provide support for the next low.

Down Trend: The lower highs and lower lows in a series is a downtrend. In the stock’s trend, the low of the last swing will provide resistance for the next high.

Long Swing Trades: Long swing trades are carried during the uptrend. Once the swing trader recognizes the uptrend, the trader looks for buying opportunities in that particular stock.

Short Swing Trades: Short swing trades are carried during the downtrend. Once the swing trader recognizes the downtrend, the trader looks for selling opportunities in that particular stock.

Swing trading strategy comprises:

• The method of trade entry
• Stock selection
• Time frame
• Money management
• Risk control policy
• Exit

Advantages of Swing Trading:

• Swing trading is a good trading style for the beginning traders and individual investor.
• Swing traders are interested in patterns and price trends and leans towards technical analysis to look at the stocks with short-term price momentum.
• Swing traders hold the stocks for a short time frame playing the general upward or downward trends in the stock market.
• Swing traders mainly look for profit opportunities and do not worry about time limits.
• Swing trading is called momentum investing as the traders only capture positions that are making quick moves.
• Swing trading strategy takes advantage of brief price swings in strongly trending stocks and carries the momentum in the direction of trend.
• Swing trading is the best approach for multiplying profit and making money in stock market with less cost in short time with both short and long trades.
• Swing trading combines the slower cycle of investing and the increased potential profits of day trading.
• Swing trading process can be repeated over and over again and less chance of error.
• If the swing trader is sure about the market trend then the swing trading can be adept for both bear and bull markets.

Disadvantages of Swing Trading:

•  Swing traders will be at the risk of overnight exposure, while this is not a concern with day trading.
• In Swing trading the traders should be aware about the trend and must be “Right” about the direction and the timing of the stock market.

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