If you’re having trouble understanding how does swing trading work? You are at the right place here as we’ll bring you a complete introduction of swing trading. It has been labeled as a sort of fundamental trading, in which traders can hold tradable assets for longer than one day.
The changes in the corporate fundamentals require some time (several days or sometimes a week) to cause significant price movement rendering a sufficient profit. Swing trading lies in between day trading and trend trading. In day trading, traders can hold assets for a few seconds to some hours, no more than a single day. While the trend trader needs more time even sometimes weeks or months to examine long-term Fundamental Trends of the market.
Swing Trading allows its traders to hold particular tradable asset for a few days or sometimes for three weeks, depending on how market goes. Before going further into this, we would like to explain the different types of traders.
Momentum Trading – As it name suggests, the momentum traders look for the stocks moving considerably in one direction with high volume and try to catch the momentum train to earn a desired profit.
Scalping – The scalper is a trader making hundreds of trades each day just to scalp a little profit from each Trade by taking the full advantage of bid-ask spread.
Technical Trading – In technical trading, traders rely on graphs and charts, keeping tabs on index graphs to determine the signs of divergence or convergence that can indicate sell or buy signals.
Fundamental Trading – In fundamental trading, traders trade companies after doing fundamental analysis covering things like stock splits, anticipated or actual earnings reports, acquisition or reorganizations.
To be successful in swing trading, one needs to learn the art of picking the right stock. Once you learn this, you’ll see a big surge in your profits.