Swing Trading

Swing Trading is a form of trading with holding periods ranging from 1 day to 1-3 weeks, sometimes up to a month. It depends on the movement of the asset’s price. The swing trades are usually based on technical analysis. But sometimes traders use fundamental analysis to predict price trends.

Swing Trading vs Day Trading vs Trend Trading ?

Swing Trading is a trading style between Day Trading and Trend Trading in terms of two main aspects:

1. Holding period : Swing trades hold positions overnight but day trading does not hold positions overnight. But swing trading will not hold positions for months like Trend Trading.
2. Trading Time Frames : Swing trading usually uses a 4 hour time frame, unlike Day Trading which uses a 15 minute to 1 hour time frame while Trend Trading uses a Day to Month time frame.

In addition, Swing Trading places orders less frequently compared to Day Trading. Swing traders tend to take quite a long time to consider because they have to wait for the chart to come up with clear trading conditions before making a trade.

Swing traders need to know that there is an opportunity to face the risks of holding positions overnight or over the week. which is likely to cause a price gap that can damage a trader’s position.

For taking profits and cutting losses in swing trading style. It can be done in a variety of ways depending on the market situation. But we can classify them into two main types:

1. Take profits or cut losses from the risk-reward ratio where the trader has already set the TP/SL level and let the price reach the placed order.
2. Take profits or cut losses from technical signals or indicators such as short-term EMA cross long-term EMA or RSI reaches Overbought and Oversold level, or price reaches important support-resistance levels. It will proceed to close the status.