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What is Swing Trading?

This article was posted on Jun 11, 2008

Q.What is Swing Trading?
A.Swing Trading takes advantage of brief price swings in strongly trending stocks to ride the momentum in the direction of the trend.

Swing trading combines the best of two worlds — the slower pace of investing and the increased potential gains of day trading.

Swing traders hold stocks for days or weeks playing the general upward or downward trends.

Swing Trading is not high-speed day trading. Some people call it momentum investing, because you only hold positions that are making major moves.

By rolling your money over rapidly through short term gains you can quickly build up your equity.

Q.How does Swing Trading work?
A.The basic strategy of Swing Trading is to jump into a strongly trending stock after its period of consolidation or correction is complete.

Strongly trending stocks often make a quick move after completing its correction which one can profit from.

One then sells the stock after 2 to 7 days for a 5-25% move. This process can be repeated over and over again. One can also play the short side by shorting stocks that fall through support levels.

In brief a Swing Trader’s goal is to make money by capturing the quick moves that stocks make in their life span, and at the same time controlling their risk by proper money management techniques.

22 Responses

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  1. Yogesh Says:
    July 12th, 2009
    Posted at: 1:15 pm

    is swing trading only useful in BUY mode in stock?


  2. CB Says:
    July 12th, 2009
    Posted at: 1:28 pm

    Hi Yogesh, no..it can be used for short selling also.. but short selling for short term is allowed only in F&O


  3. G U Nair Says:
    September 6th, 2009
    Posted at: 8:03 am

    What about Nissan Copper?


  4. CB Says:
    September 6th, 2009
    Posted at: 12:54 pm

    Hi G U Nair, a close above 26 can take it upto 30.. it has support at 23


  5. Jubaraj Says:
    September 17th, 2009
    Posted at: 8:39 pm

    Sir,

    I m new in stock market. Is it safe to invest in stocks with -ve PE / High PE ?


  6. Jubaraj Says:
    October 3rd, 2009
    Posted at: 9:36 pm

    Dear CB Sir,

    I m new in stock market. Is it safe to invest in stocks with -ve PE / High PE ? & How can I subscribe to auto reply to my e-mail ID for your answer ?


  7. CB Says:
    October 3rd, 2009
    Posted at: 9:57 pm

    Hi Jubaraj, invest in strong companies which are trading at a low PE. we do not have a auto reply feature yet..

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