There isn’t anything quite like taking an active approach to trading stocks. While some traders prefer to sit back and wait for the perfect time to enter and exit the market, others are more inclined to jump in and reap the rewards of strategically-timed trades. Swing trading can be one of the most successful ways to view the stock market, and with a few sound tips and tricks in mind, you might just be on your way to making safe, considered decisions with swing trading.
Assessing the Markets
Before making any stock picks, assessing the markets must come first. Start by familiarizing yourself with the basics of trading. Make sure to have an understanding of financial data, stock charts and even the different types of stocks; research different frequency of trading and the language of trading. Once you have a strong, basic understanding, it’s time to assess the markets for finding the stocks for swing trading.
Look at the news and current economic data to get a better idea of which stocks are trending, as well as looking at the big tech and consumer stocks to anticipate where people are likely to put their money. Identify different sectors, trends, and patterns in the market to determine where your picks should go. You can also use tools such as Fundamental and Technical Analysis to check the stock’s future potential.
Choosing Your Stock
When selecting stocks for swing trading, it’s important to think about stock that will be held for a few days, and preferably no more than two weeks. Sticking to reliable, strong stocks is often the best bet. Look for those with good liquidity and high trading volume — this means it will be easier to get in and out of the trade in a timely fashion.
You should also have a good understanding of the selected stock’s risk profile. While the price might seem to be at an all-time low, your research should highlight whether the stock is risky and if so, to what degree. Knowing what risks could be associated with each stock can help to give your swing trading a seamless, successful finish.
Monitoring Your Swing Trading
Once the stock is chosen and the purchase is made, monitoring should become your primary focus. Watching the stock prices and trends will be the key to determining when to enter and exit the trade.
Use indicators such as moving averages, trend lines and support and resistance levels to help identify when this could be. Employing the Relative Strength Index (RSI) can also help identify the strength of price movement over time and point to possible turning points to make your trade more successful.
No matter which trading style you prefer, swing trading can be a rewarding way to take part in the stock markets. Of course, you should always remember that market prices can move in either direction and before making any decisions, you must always take into account your own financial situation.
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