What is Swing Trading: (Trading at the frequent swings of the market)
Swing Trading is type of trading where stocks are bought for short term to medium term,
Considered to be few days or few weeks.
Swing Trading basically works on the technical analysis and higher time frame chart analysis.
usually trader hold the stocks for some days, or some weeks or some months bases on the technical analysis.
Swing Traders look for the intermediate term opportunities to make some good profit and it is quite different than the Day Trading and Scalp Trading.
Typically this trading is focused on large cap stocks because of their liquidity and volume base on the fundamental and technically analysis
How to do swing trade.
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Short list the stocks:
Short list the stock which gives the good returns and have done good Performance in recent times based on the fundamental analysis.
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Technical Analysis with Chart:
Once the stocks are short listed, Start doing the Chart analysis,
Find out the recent swings, Support and resistance, Moving average cross over, volume, trend line.
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Entry:
Fix out the entry point based on your analysis, The analysis should contain Risk Ration, Stop loss, Profit and exit point.
Example: If you are keeping 2% stop loss then your profit line should be minimum 4%, That is 1:2.
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Exit:
Exit is also plays important role like entry point.
marry your position, once the target is achieved get out of the stock and hold your profit.
5. Repeat above 4 steps
Advantages of Swing Trading:
1. Trader will get enough time to do the proper analysis.
2. Holding Position will good profit (Based on strategy developed)
3. No Stress and Pressure like Day trading.
4. Less no of transaction and less brokerage fees.
Dis-Advantages of Swing Trading:
1. Gap up and gap down may leads to more loss
2. Bad Risk and Ratio will lead to more loss.
3. Capital will be blocked for certain time, you not be able to catch another trades.
4. Same as Profit, Holding your position may give more loss.