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Swing Trading

Swing trading is a trading strategy that seeks to capture short- to medium-term gains in a stock or other financial instruments over a few days to several weeks. Swing traders use technical analysis, chart patterns, and momentum indicators to identify potential price movements, entering trades at the beginning of a trend and exiting before it reverses. The goal is to profit from short-term price swings rather than long-term growth.

Example

A swing trader might buy a stock that has shown strong upward momentum and sell it after a few days when technical indicators suggest that the price may soon peak.

Key points

• A strategy focused on capturing short- to medium-term price swings.

• Typically holds positions for days to weeks.

• Relies on technical analysis, momentum indicators, and chart patterns.

Quick Answers to Curious Questions

Swing trading holds positions for several days to weeks, while day trading closes all positions within the same day and long-term investing holds for months or years.

Swing traders rely on technical analysis, chart patterns, and momentum indicators to spot trends and time entries and exits.

Swing traders face market volatility, overnight risk from holding positions, and potential losses if a trend reverses unexpectedly.