Wednesday, 30 September 2009

Just What Is Swing Trading?

Do you know about swing trading? Swing traders ride the swings or oscillations that markets make as the stock or currency pair pivots from one price level to another. Swing trading is a style of trading that can be used on any market. The main three styles of trading are day trading, swing trading and trend or buy and hold trading. Swing trading is found in between day trading and buy and hold trading and is highly recommended, no matter what you trade. Let's take a look at the other styles.

Day traders typically keep their trades confined to a single trading day, hence the name. Scalping is also considered a day trading style of trading. While sclaping can offer extremely high rates of return, it does so with very high risk levels. Trend traders, or buy and hold traders, usually involve trades being held for several weeks to months. A trader typically needs substantial trading capital to be able to make any decent profit from buy and hold trading.

Swing trading is medium term focused and usually has traders holding trades for several days, but less than a week. Do traders hold trades for longer periods? Of course, but this is just a general rule of thumb. Some markets are more suitable for swing trading and it is important that you are trading the right currency pair or stock. High rates of return with low risk is what make many traders swing trade. This is the perfect balance for trading profitably.

Buy and hold trading typically involves high levels of capital that far exceed the profit potential. Only swing trading offers high rewards with low risk. Swing trading offers low risk but the potential to make substantial profits in both forex and stock markets.

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