If you are new to swing trading, you must be wondering about the basic question, which is what exactly swing trading is. With that said, in simple terms, you might want to think about swing trading in terms of holding trades for a few days or a few weeks. Compared to other trading platforms, such as day trading, swing trading is slow-paced.
Basically, the objective with swing trading is to catch the potential swings or fluctuations in the market. You should know that such swings, which refer to potential ups and downs in price movements, are part of every financial market.
What Exactly is Swing Trading
Now that you have a better understanding of what is swing trading, let us dig a bit deeper and explore why exactly it is referred to as “swing” trading. Since you are new to swing trading, you should know that the term swing directly reflects what you, as a swing trader, must try to accomplish, which is essentially profiting from potential price swings.
With that said, the price swings are the natural fluctuations that occur in all financial markets. Just think about a pendulum and how it swings back and forth, continuously moving, which is exactly how markets move, back and forth.
Now, as a swing trader, you will be positioning yourself in the market to profit from these back-and-forth patterns.
Potential Timeframes of Swing Trading
As we mentioned earlier, swing trading is a slow-paced market, which means that you can hold trading positions for days and weeks. Nonetheless, you must understand the time frames that you use and understand the most effective time frames so that you can earn potential gains with swing trading. With that said, the most effective time frames include a four-hour chart, a daily chart, and a one-hour chart.
The one-hour chart is typically the lowest time frame for swing traders. And if you go anywhere lower than the one-hour time frame, you actually approach the day trading market. With that said, the most effective and common timeframes for swing trading are usually the four-hour chart and the daily chart.
Who Can Become A Swing Trader
The best part about swing trading is that literally anyone can become a swing trader. With that said, you might want to become a swing trader, even if you have a regular job or other life commitments, such as studying or looking after a family.
However, you should know that swing trading requires less active trading commitments or styles, compared to regular trading, such as day trading. Still, you must have solid technical analysis skills, so you can make the most of swing trading. So, if you choose to become a swing trader, make sure you really understand market trends and are familiar with swing trading strategies, such as the momentum strategy and the support and resistance strategy.
Benefits of Swing Trading
Swing trading offers several benefits, such as flexibility, as you do not have to spend lots of hours reading charts, which is typical for day trading. Besides, swing trading provides you with a good risk-to-reward as you do not have to deal with the volatility in the market. However, you should know that as a swing trader, you do require patience, especially because a market move will not come immediately.
