A Closer Look at Swing Trading

Some analysts consider swing trading little more than day trading over a slightly larger time. Most day traders hold dear to the conviction that they should close out all of their transactions at the end of any given day to avoid potential price gaps, but swing traders are willing to hold positions longer in order to maximize their profits.

There are two types of swing traders. Basic swing traders are prone to taking a slightly longer perspective on trades than are traditional day traders. They may be willing to hold a position for several days. Some may be ready to work on timelines that stretch over a few weeks.

This type of swing trading does offer the advantage of making fewer trades and paying less in commissions than does day trading. The slightly wider windows of opportunity also produce a slightly larger margin of error and allow one to take advantage of gains that last for more than a single day. Swing traders avail themselves to the best possible technical analyses of investments in order to find great opportunities and they can often post more substantial profits than most day traders do.

Those higher profits, however, come with an attendant heightened risk for each trade. Additionally, day traders are usually “out” of their positions before the markets’ bells ring the next mornings. Swing traders are there for a slightly longer haul and expose themselves to the myriad of risks associated with overnight developments.

Some swing traders work over even longer per position time frames. This approach allows one to look past the natural small price moves and variations that might compel some day traders to dump a position prematurely. Obviously, these longer-term swing traders further enhance their potential for earnings, but risk is heightened even more. Additionally, longer-term swing traders may miss some wonderful short term earning opportunities.

Swing trading occupies the small slice of territory between day trading and range trading. It can be a wonderful means of income generation, allowing one to set his or her sites on remarkable profit objectives. Successful swing trading, of course, is all about finding the right moves and making them at the right moments.

Now that you have a grasp of what swing trading really is, you can take the opportunity to investigate ways to profit from this interesting approach to the markets.