Swing trading is a short- to medium-term trading strategy that aims to capture gains from price “swings” — upward or downward movements — over a few days to several weeks.
🔄 Core Concept:
Swing traders buy when they believe a price will rise ("upswing") and sell (or short-sell) when they expect it to fall ("downswing"). They don't trade daily like day traders or hold long-term like investors.
🧠 Key Elements of Swing Trading Strategy:
1. Technical Analysis
Swing traders rely heavily on:
Chart patterns (e.g., head and shoulders, flags)
Indicators (e.g., RSI, MACD, Moving Averages)
Support and resistance levels
2. Fundamental Analysis (optional)
Some also look at:
News events
Earnings reports
Sector trends
3. Entry & Exit Points
Timing is crucial. Traders:
Enter at reversal or breakout zones
Exit after a small gain (5–20%) or at the next resistance/support
4. Risk Management
Use stop-loss orders to limit losses
Avoid overtrading
Proper position sizing (risking 1–2% of total capital per trade)
5. Holding Period
Usually a few days to a few weeks
📊 Example:
You see Ethereum has pulled back to a strong support level at $3,400.
RSI shows oversold.
You buy ETH at $3,420.
Your target is $3,700 (next resistance).
You place a stop-loss at $3,350.
If ETH hits $3,700, you exit with a profit. If it drops to $3,350, your stop triggers.
✅ Pros:
Less stressful than day trading
Takes advantage of both up and down markets
Requires less time than day trading
❌ Cons:
Risk of overnight news or gap-downs
Can be whipsawed by sudden market reversals
Requires knowledge of technical analysis
