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The New Kid on the Block is Swing Trading Stocks


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Swing Trading Stocks

Take Your Time by Swing Trading Stocks

In today’s world of immediate gratification, swing trading stocks practically counts as a long-term investment strategy. The idea behind swing trading is to buy a stock under certain specific algorithmic conditions and then typically to hold it for a period of one to four days before moving on to the next swing. While swing trading might appear to the casual observer as nothing more than an extended style of day trading, this is not actually the case.

The Difference Between Swing Trading Stocks and Day Trading

Day traders are not really concerned with anything other than volatility and don’t really care what is happening to the market in general. Swing traders, on the other hand, are much more involved in technical analysis, particularly in the matter of moving averages. The swing trader depends on a fixed set of trading algorithms to signal market entry and exit points.

In one regard, however, swingers and day traders share a common trait, which is to track the general trend and then to buy on the pullbacks and sell on the peaks. It always sounds simple in theory and ends up being difficult in practice. A swing trading system does offer a degree of technical support, in that it imposes a set of tangible curbs on a trader’s instincts. Swing trades stick to their market indicators and are not in the habit of running against what they perceive the trendline to be. When the indicators are all positive, they are long, and when the indicators are all negative, they go short regardless of an individual stocks potentially contrarian behavior.

To some degree, therefore, swing trading involves a marriage of hybridized Dow Theory indicators with the short horizon usually found in day trading. This combination of structural discipline and rapid turnover tends to cut losses short if they do in fact occur, while the slightly lengthened swing duration grants enough time for movements to have an effect on stock prices.

Swing trading stocks allows investors to combine the best of both instinctual and technical trading strategies without becoming too enmeshed in either. The relatively elastic time line lets proponents of the strategy pick the individual sweet spot that effectively balances out the two disparate approaches.

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