Introduction To Swing Trading

Swing trading is defined as a fundamental type of trading involving holding a position for longer than a single day. The reason for this is that most fundamentalists, in reality, are swing traders because changes in corporate fundamentals can involve several days or even a week or more in order to cause any sufficient amount of price fluctuation to allow a trader to make a reasonable profit.

This is a simplified description of swing trading. In the real world, swing trading falls in the middle continuum that exists in the area between day trading and trend trading. Where a day trader tends to hold stock anywhere from a few seconds to a few hours but never more than a day, a trend trader looks at the long-term potential of the stock and may hold it for a few weeks or months. Swing traders, on the other hand, hold a stock for a period that varies from a few days to a few weeks, a period, which is between those extremes, and then trade the stock based on its weekly on monthly trend of fluctuation that flows from optimism and pessimism.
Swing trading is not a practice that one can pick up on a part-time basis, but rather, one must follow the trends closely in order to know what the trends in fluctuation are. Swing trading may be the easy type of trading for a beginner because it allows him or her to get into the market and really do the research and follow the trends, thus learn just what is happening in the stock market. On the other hand, if a beginner makes a wrong decision, he may become frustrated with the stock market and not want to become involved any longer, so the pessimistic and optimistic fluctuations involved with swing trading may be a deterrent to the new trader. The stock market is very volatile, and for a new trader that may take some time to understand.

Swing trading is perhaps one of the easiest ways for a new trader to invest since he will not hold on to the stocks for very long, but at the same time, he will not trade off quickly as a fundamental trader does, and thus not really know what the stock is going to do. Fundamental trading for a newcomer is a highly risky concept and should be avoided.

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