Swing trading is a style of trading that attempts to capture short- to medium-term gains in a stock (or any financial instrument) over a period of a few days to several weeks. Swing traders primarily use technical analysis to look for trading opportunities.
Swing traders may utilize fundamental analysis in addition to analyzing price trends and patterns.
KEY TAKEAWAYS
- Swing trading involves taking trades that last a couple of days up to several months in order to profit from an anticipated price move.
- Swing trading exposes a trader to overnight and weekend risk, where the price could gap and open the following session at a substantially different price.
- Swing traders can take profits utilizing an established risk/reward ratio based on a stop loss and profit target, or they can take profits or losses based on a technical indicator or price action movements.
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