What is Swing Trading ?
Swing Trading is a special style of trading mostly followed by the people who do not have time to sit in the front of the computer screen to see the tickers and also do not have the patience to hold for too long in uncertain markets.
Swing Traders takes the position buy or sell then wait for one to three weeks, normally this kind of trade is to exploit the news that would be in that stock.
For finding the stocks which are good for swing trading the technical analysis is used and the factors of price and volume are taken into account and it is said the “everything is there in the price and volume.”
The gains from swing trading are normally in the range of 15% to 30% and the downside is very limited because of the time involved into it.
How much money to put into swing trading?
Because swing trading has a span of one to three weeks it is wise to divide your money into six equal parts then invest one part if stock goes down due to market condition invest half more do this for all the stocks so you will have maximum three open positions and some money in cash which should be used to get the opportunity of unexpected correction in the market.
When to Get in the stock?
When there is some news about to happen in the stock it will jump out of no where that’s the day when it comes under scan now next two days it may run up or get go down two to three percent so the weak hands get out of it now that is the time to buy quietly never buy at once but accumulate it over period of 2 to 3 days so you get the best price possible.
When to get out of the stock?
Tricky question : exit is always a difficult decision meaning what if the market goes down and the profits trun into losses? What if the news is not so good and the stock goes down? The best answer to exit rule is ride the profits till you are comfortable if you feel that it will run up more hold it but have a very strict stop loss. Market helps only disciplined traders.
