Swing trading seeks to generate profits from short- to intermediate-term price movements. Swing traders try to identify pockets of support or resistance, entering when the counter trend ends and the dominant trend resumes.
Unlike day traders, who often make many trades and close out all positions at the end of each day, swing traders look for bigger moves and hold their positions for longer periods.
Swing trading targets short- to medium-term price movements over days to weeks.
Technical analysis tools include momentum oscillators such as the Relative Strength Index and the Moving Average Convergence Divergence (MACD) indicator.
Most swing traders are individual traders, not institutional investors.
Swing traders try to enter positions at key support and resistance levels, with many choosing to wait until the reversal is underway before entering a trade. They also have well-defined targets for the trade, often seeking to exit just before or just as the move ends.
Because swing traders are looking to enter at reversal points and usually have well-defined profit targets, assessing each trade's risk/reward ratio is essential. While a trend trader might enter a rising market and hold on for as long as the market's going up, swing traders must determine beforehand exactly where they'll enter and exit, placing a tight stop-loss order to minimize any losses.#SwingTradingStrategy