Strategies for Successful Swing Trading

Posted by Swing Alpha on September 4th, 2017

What is Swing Trading? This is a short term strategy adopted by traders for buying and selling stocks and options. Most of the traders take resort to swing trading because changes in corporate parameters may require a few days or a week to cause any impact on the price changes.

Reality check

A day trader has the capability of holding the stock for the entire day. He is involved in the purchasing and selling of financial instruments within the same trading day. A trend trader, on the other hand, observes the trend of stock and may continue to hold until there is a change in trend. So the holding may vary from a few weeks to a couple of months. These traders are situated in the middle of the spectrum. They are between these two extreme positions, and swing traders hold stock from a few days to two or three weeks.

Some features

The world of swing trading keeps oscillating between pessimism and optimism. Let us discuss some of the features of this kind of trading.

Picking the right stock

To be a successful swing trader you need to choose the right stock. In all the major trading exchanges of the world, the most active stocks that are traded are the large cap stocks. In the active market, these types of traders take advantage of volatile nature of the stock to gain returns.

Choosing the right market

The best positioning of swing trader takes place when the markets are not stationed in one of the extreme environments. So a bull market or bear market will be a challenging situation for the trader. The most active stocks will also lose its rhythm in these situations. A market in between these two extremes works out better for these traders. It is a successful trader who can identify the type of market one is experiencing at this present moment.

Baseline value

A successful Best Stock Picksswing trader has the perfect understanding of baseline value, and he can analyze the behavior of capital above and below this value to reap profits in reality. They develop a strategy of wait and see till the stick hits the baseline and then start to make their moves. For identification of baseline, he makes use of the exponential moving average technique.

Exit strategies to take profit

You can utilize trailing stops before you exit a trade. A trader chooses to exit while being close to the upper or lower channel line. In the process, you may miss out on the best opportunity, but it is more sensible to take a portion of the profits beforehand instead of waiting for the channel line to be hit at that time frame.

Stock picking techniques

Operating in the exchange market is a thrilling experience. You have to admit it is a roller coaster ride. They do not always perform the way you anticipate. There are strategies for Best Stock Picks. Analyze the fundamentals of a company to determine the intrinsic value of the stock. If this value is more than the value at which its trading is taking place, then it makes sense to buy that stock.

About the Author:

The author of this article has an extensive knowledge in the field of Best Stock Picks etc.