What is Swing Trading?
A dynamic world with rapidly evolving environment provides many opportunities to profit. Trading in the stock market is one such opportunity. While a long term investment strategy in equity has been shown to earn good returns, there are short term fluctuations in equity prices. This means that over a relatively short interval of time, of up to 3 years, the returns generated by equity investments are uncertain. At the same time, short term fluctuations hold the key to making attractive returns by taking calculated risks.
How is this possible?
Swing trading is one of the strategies of catching the short term trend of a particular stocks or Index. It is usually defined as a method which seeks to capitalize on the short-term upswings and downswings in share prices. These short term swings usually last from one day to five day. Swing trading as a strategy allows even retail investors to take advantage of short term moves that the stock market makes. These recommendations are different form stock tips that you usually get from media houses. While large institutions trade in sizes too big to move in and out of stocks so quickly therefore, small traders can get attractive returns from these moves.
Swing trading involves use of technical analysis to look for stocks with short-term price momentum. It should be noted here that swing trading is not about trading on the basis of fundamental or intrinsic value of stocks. It is all about catching the movers based on in stocks price trends and patterns. Fundamentals analysis tells you which stock to buy but swing trading tells you when to buy and when to exit in time before the party gets over.
Swing trading strategy if applied properly can create alpha for your investment. It means you will be able to make money in both bull market and in bear market.
Swing Trading is the best strategy for making money in Indian share market by trading for short-term and medium-term investors and traders. You can also refer to http://en.wikipedia.org/wiki/Swing_trading for further reading.
Swing trading has been popular in western stock markets. Legendry investors such as W. D Gann, George Douglas Taylor, Richard Wyckoff and Jesse Livermore can also be termed as swing trades of the yesteryears. Larry William, Marck Rivalland, Linda Bradford Raschke are also known for using swing trading techniques.
