Swing Trading

Swing trading is the manner of holding a particular stock in a given time period from a couple of days to a couple of weeks, and actually trading them based on their intra-week (or intra-month) shifts, or oscillations, between positive (optimism) and negative (pessimism).

Swing trading targets the bullish and bearish market points, and is perceived to be more challenging than trading in between these two market points. In extreme bull or bear market, the stocks rarely pull off the same level of oscillations that they would settle in when the indices are stable (or not in their extremes.) The bull and bear points have a one-directional momentum, forcing traders to trade based on the long-term trend in direction.

Swing trading is favorable in a stock market environment where companies with stock liquidity leans toward trading within (either above or below) a baseline value based on the EMA or exponential moving average, which analyzes time series data like stock baselines. When the swing trader identifies the baseline, the stocks are kept long when it is heading up and kept short when it is down. Unlike the standard daytrader, the swing trader do not watch out for that perfect tick of time to move the stocks they have – buy at bottom, sell at peak. Instead, they patiently wait for the baseline hit and confirms the direction before they trade.