Swing Trading

SWING TRADING

A swing trader, as the name implies, seeks to profit from short-term swings in the market. Though these traders do not hold positions overnight, they can still be aggressive and use a high amount of leverage. Swing traders are typically active traders who look for opportunities that can be realized within a few days or weeks.

Swing trading is a short-term trading strategy aimed at capturing benefits from both the upward and downward swings (or "swings") in an asset's price. Swing traders usually hold positions for several days to several months, but not more than a year. They often use technical indicators – such as moving averages, oscillators, and Bollinger bands – to help identify patterns for entry and exit points in an effort to reduce risk while maximizing profits.

Long term swing trading, in my opinion is one of the most successful investing techniques. This is looking solely at strong companies (blue chip stocks) and investing in them when they pull back an example of this right now would be Home Depot $HD. It's been in an uptrend for over 10 years now and has recently pulled back off its highs. 

Another example that I recently took was Costco $COST sold off more than 15%. So I took a position not knowing when I would see profit but having the comfortability of knowing that it's a great company. And two months later it's back at new highs and I'm up almost 15%. 

Overall, this is best when invested into an index fund with most of your money giving you diversification and then taking a smaller percentage to buy a great company at a great price and simply holding it until it does what it's been doing for the past decade.

Bottom line

Swing Trading can be a profitable and accessible way for an investor to get into trading. However, compared to standard stock or ETF investing, the relative complexity involved with a swing trading strategy is not well-suited for amateur investors.

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