What is Swing Trading?

Swing trading is a type of trading strategy that focus on making profit from a single market swing. This strategy relies on stop loss technique to keep the loss amount to an acceptable level. The purpose is to capture the profit before the market flip back and wipe out the profit.

Advantage and Disadvantage of Swing Trading

There are several advantages of swing trading strategy, such as less time commitment. Unlike day trading, which would require traders an immense attention and focus to keep an eye on their positions as well as constantly monitoring new market opportunities for a potential profit.

While the swing trading style might only have a few or almost no transaction on some days. Swing traders would alarm to check the positions only when a certain price level reached.

The con for swing trading is that trader can only capture the single move in the market by quitting the trade before the next reversal. And swing trader could miss the potential market trend ride.

Example of Swing Trading

Trader can enter the trade after a deep pullback. 50-period moving average (MA) can be used to identify the trend for a bullish price rejection. Trader can go long on the next candle and set a stop loss of 1 ATR underneath the low, and take profit for the next swing.

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