What is Swing Trading?
Info by Never Rich Enough | 2012-06-19 at 22:58
Swing trading is an investment strategy in the stock market, which assumes that a price is always subject to more or less fluctuations. These fluctuations always occur regardless of whether the price rises or falls. So, both rising and falling prices are going ahead with a constant up and down move.
Swing traders are trying to exploit these up and downs, by going into a paper at low points and getting off at high points. Between low and high points, there can be a few hours, days or even weeks, so that there is a relation between swing trading and day trading.
Usually, suitable stocks and securities are selected by using the chart analysis technique. Then, in most cases, the deepest possible limit that can be achieved quite realistic is set. Immediately after buying the paper, again another limit is set to sell the stock, which will also be set so realistic that it can be achieved. This cycle can be repeated between low and high prices as often as it is possible. The supposedly correct points for the entry and exit are again set on the basis of the analysis of the chart.
Since no one can predict the development of market prices absolutely correctly, this strategy can quickly go wrong in many places and result in losses. Especially, losses can result if you missed the ideal point to get in or out and therefore you are buying and selling at the wrong time. It may also happen that the price does not recover after a low again and you can never sell your papers for your desired price.
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