Swing trading is all about the trend!
Swing traders seek to capture market changes of direction over the span of days, weeks, or even months - it is a much less aggressive trading style than that of being a scalper or day trader, but its more aggressive, more profitable, and safer than being a buy and hold type of investor.
The reason why it's called 'swing' trading is because the prices of a particular stock swings back and forth, from an over-sold state to an over-bought state - we attempt to capitalize on those imbalances.
The Professional traders create what is called a 'Campaign'. Basically, they formulate a plan to accumulate (buy) stocks and drive them to ever higher prices, then they distribute (sell) stocks, and flood the market with so much supply of stock shares that prices come down usually very rapidly and sometimes very significantly.
Well, during the rise and fall of their campaign, there are smaller corrections along the way - The swing trader seeks to profit from those smaller corrections, as well as the larger moves by the professionals.
Below are examples of swing trades based on a 1-year S&P500 chart. It's a matter of catching the natural trends (if you can call professional intervention, 'natural') of the price movement.
Without a proven swing trading system in place to follow these major trends in the stock market, success can be difficult. But once you find a system that works, swing trading stocks, ETF's, and most other types of securities can be a low-risk, profitable method of trading. Even investors such as Warren Buffet, who by many is considered to be a value investor, but who is in reality have been known to be a very successful long-term trader, is a long-term swing trader.
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