Swing Trading is a trading method in which the trader holds a position for more than one day. He can stay in the position for a few days to several weeks. Swing traders seek to profit on a price movement in an asset over a short period of time. It stands somewhere between day trading and trend trading. Swing trading is based on the concept of making a series of little gains that add up to a large profit. Other traders, for example, may have to wait five months to make a 25% profit, whereas swing traders can make 5% weekly gains and outperform other traders in the long run. Decisions are made based on market trends, employing fundamental and technical analysis to spot patterns, trends, and probable trend shifts in a short period of time.
Day Trading vs. Swing Trading
Swing trading and day trading may appear to be identical, but there is one fundamental difference between the two: time.
To begin with, the time frames for holding a trade differ. Day traders enter and exit transactions in a matter of minutes or hours. Swing trading is usually done over a period of days or weeks.
Due to their shorter time frames, day traders rarely hold positions overnight. As a result, they avoid the risk of news announcements arriving after business hours generating a large market move against them. Swing traders, on the other hand, must be aware that a stock's opening price may fluctuate dramatically from its closing price the day before.
What Are the Benefits of Using Swing Trading Techniques?
Swing trading has a bigger profit and loss potential. These tactics allow traders to cut through the clutter of intraday trading and concentrate on the big picture.
Swing trading techniques, on the other hand, are based on technical indicators, which reduce the danger of speculation and assist you in making an informed decision.
Using trading methods also means you won't have to monitor the market on a frequent basis.
What Is A Swing Trading Strategy?
You should be familiar with the following words before moving on to the strategies:
The point at which traders enter a trade position, as defined by technical indicators, is known as the entry point.
Exit Point: This is the point at which traders square off their trade positions, which may be determined using technical indicators as well.
Stop Loss: Setting a stop loss is essential since it allows traders to incur fewer losses.
Swing trading gets its name from the fact that it aims to profit from price oscillations or swings, which can be upward or negative. Swing traders, like day traders, use a variety of technical trading techniques, but only for a short period of time.
Swing traders build methods using common trading tools such as Bollinger Bands, Fibonacci Retracement, and moving oscillators. Traders also keep an eye on emerging patterns in multi-day charts, such as,
1. Pattern of the head and shoulders
2. Flag creation
3. Pattern for the cup and handle
4. Triangle pattern
5. Crossover of Moving Averages
Best Swing Traders in India
The Best Swing Trading Broker ranking above was determined using five crucial factors or parameters for swing trading. The parameters are as follows:
Brokerage Charges for Swing Trading Experience with Swing Trading Platforms or Apps, Swing Trading Trade Signals availablility, as well as Swing Trading Products.
1 Angel Broking
2 Motilal Oswal
7 ICICI Direct
8 Axis Direct
10 HDFC Securities