#SwingTradingStrategy How does swing trading work?

Successful swing traders combine fundamental and technical analysis, but they spend less time reviewing financial statements than they do investment price charts. Investments rarely shoot straight up and down. They tend to rise and fall over time. Swing traders believe the process is predictable enough that they can identify spots where they can get on and off board.

Based on what they’ve seen an investment do in the past, a swing trader might aim to buy near the bottom of a cycle and sell near the top. If the trend is moving in the other direction, they might do the opposite — shorting the investment at the top and then cashing out at the bottom.

What are the benefits of swing trading?

The process of swing trading helps you identify when to make a trade. While buy-and-hold strategies may help build wealth in the long-term, that doesn’t mean there isn’t money to be made in the meantime. Swing traders can make money by accurately predicting small movements in the market.

There are a couple of other advantages. Swing traders can invest in a market trend without committing a large sum of money over months or years. Done correctly, this balance of short- and long-term investing can add value to a portfolio. Swing trading is flexible, too. You can apply it to stocks, bonds, and commodities.