There’re two main types of trends: uptrends and downtrends. The absence of a trend is called a ranging (or sideways moving) market We’re going to answer that now, but first, let’s take a closer look at how trends develop. You may be asking yourself “But, how do I know how low to buy, how high is high enough to sell?” The same strategy can also be used when trading downtrends, only that you would look to sell high and buy low.

One of my favourite swing trading strategies is to buy low and sell high during an uptrend. Read: Pros and Cons of Day Trading Swing Trading Strategy #1: Buy low, sell high Now that you’ve learned the main characteristics of swing trading, it’s time to move on to the most interesting part of this article – Swing trading strategies! Swing trading requires patience and discipline to avoid entering into a trade too early.While holding trades for a few days has its advantages, it also comes with a certain amount of overnight risk.Lower trading costs compared to day trading.Swing trading is less stressful than day trading, as it doesn’t require sticking to the charts all day long.Swing traders take trades that have a high profit potential.Read: List of Trading Types and Strategies: Which Suits You Best? Pros and Cons of Swing Trading This makes swing trading a great alternative to day trading for traders who have a full-time job. Day traders need to actively manage their trades, while swing traders let the trades perform over a few days. Swing traders also spend less time in front of their trading screen than their day trading peers. Swing traders, on the other hand, need to have patience and wait for a trade setup to occur on longer-term timeframes, such as the 4-hour or daily ones. Day traders usually take a few trades per day as they trade on shorter timeframes that provide more tradeable opportunities. Since swing traders take a smaller number of trades than day traders, they usually face lower trading costs as well. Additional differences are trading costs, the time required to spend in front of a screen, and trade management.

Swing Trading vs Day TradingĪs you already know, the main difference between swing trading and day trading is that swing traders hold their trades for a longer period of time, including overnight. As you can see, inside a single swing, movements that go against the direction of the swing are almost non-existent, making these price-moves very profitable setups for swing traders. The red shadows show swings that go down, and the green shadows show swings that go up. The following chart shows typical swings that last for a few days. They offer great profit potential if you catch them early in their nascent phase, with very attractive reward-to-risk ratios. Swings form over and over again in the markets, whether you’re trading stocks, Forex, or metals. Have you ever seen short-term trends in charts that last up to a few days, with the price going strongly in one direction? That’s a swing and a swing trader’s dream. Swing traders aim to catch price-swings in the market that go in one direction. Swing traders hold their trades longer than day traders, but significantly shorter than position traders. In terms of timeframes, it finds its place somewhere between day trading and position trading. Swing trading is one of the major trading styles in trading, besides scalping, day trading, and position trading. Read: Average Salary of a Swing Trader in 2021 What is Swing Trading? In this article, I’ll provide a short introduction into swing trading, its main advantages and disadvantages, and explain profitable swing trading strategies that you can use right away. That’s why swing trading has a larger profit potential than day trading – trades are held for longer and it’s not unusual for profit-targets to be set a few percentage points away from the entry price.

Unlike day traders, swing traders hold their trades for a few days and aim to catch “swings” in the price, i.e. Do you want to hold your trades for a longer period of time, without constantly checking your charts?ĭo you want to increase your profit potential with wider profit targets and limit your losses to relatively small amounts?