1. Introduction to Stock Trader Types
  2. Stock Traders’ vs. Stock Investors' Roles in the Marketplace
  3. Decision-Making Methods: Informed, Uninformed, Intuitive
  4. Informed Traders: Fundamental Traders, Technical Traders
  5. Swing Traders
  6. Buy and Hold Traders
  7. Value Traders
  8. Trend Traders
  9. KISS Traders
  10. Momentum Traders
  11. Range-bound Traders - Break-out Traders - Channel Traders
  12. Options Traders
  13. Options Seller Traders
  14. Day Traders
  15. Pattern Day Traders
  16. Intra-Day Traders
  17. Intra-Day Scalp Traders
  18. Contrarian Traders
  19. Active and Passive Traders
  20. Futures Traders
  21. Forex Traders
  22. Online Stock Traders
  23. Pivot Traders
  24. News Traders
  25. Noise Traders
  26. Sentiment-Oriented Technical Traders
  27. Intuitive Traders
  28. Price Action Traders
  29. Price Traders
  30. Detrimental Traders
  31. Unsuccessful Types of Stock Traders
  32. Conclusion

Swing traders tend to spend longer monitoring stocks and considering investment opportunities than day traders. They may follow the markets for weeks or even months before making their move. In doing so, they aim to follow the momentum of the stock market and the individual stock in question when making a purchase. If the markets are moving to the upside swing, traders tend to buy stocks; when the swing stops or when they believe it to have topped out, they will sell.

Swing traders utilize both fundamental and technical analysis in their considerations. They typically specialize in a particular industry or business type so that they can best understand the movement within stocks of that type.

Because of the longer timespan in the decision-making process, and since swing trading does not require hours of daily monitoring, it is a good strategy for traders who wish to explore stock market trading without treating it as a full-time job. Swing traders could potentially complete their monitoring during a daily commute or lunch hour while working another job.

The core philosophy behind swing trading:

Swing traders believe that stocks go through four stages:

1. Basing: stocks consolidate as buyers and sellers move into equilibrium.

2. Advancing: a breakout moment from the first stage moves the stock into an uptrend.

3. The Top Area: the uptrend eventually stalls, and the stock reaches its maximum price. Stock traders may look for a head and shoulders pattern or a double top here.

4. Declining: the stock then falls into a downtrend as the sellers assume control, driving the stock to lower prices.

Swing traders expect that these cycles repeat for every stock and across all time frames. These traders believe that, if a stock is in an uptrend, and it closes above the previous swing point high and on an increased volume, then the trend is “confirmed,” meaning that it has a higher probability of continuing the uptrend. The point at which a pullback stops going down is the end of the cycle and the beginning of stage one once again. In this way, swing traders trade within stages.

Advantages of swing trading:

Swing trading offers a number of advantages over other types of stock trading.

  • Anticipated returns for a swing trader are usually higher than those for a buy-and-hold investor. In this way, swing trading can be a good way to “trade for a living.” Still, though, swing trading is not a guarantee; like other forms of trading, it is susceptible to market fluctuations and cycles. Swing traders should expect good times and lean times both.

  • Properly executed swing trades experience less risk than a long-term investor. Swing traders can allow losing trades to go by the wayside, while long-term investors have to ride out the bear market.

  • Swing traders don’t have to watch market fluctuations in real time. They can do their market research in the evening or at their own convenience.

  • Swing traders don’t have to closely pore over financial statements, to watch market tops and bottoms, or learn complicated trading platforms and software.

Swing traders keep things simple, following the basic rule: trade in the direction of the market. That means that, if the market is trending upward, trade long positions. If the market is trending down, trade short positions. Based on this simple principle, swing traders can be very successful.

Buy and Hold Traders
Related Articles
  1. Trading

    Day trading versus swing trading: Pros and cons

    Day trading involves making dozens of trades in a single day, while swing trading involves holding positions over a period of days or weeks.
  2. Trading

    Introduction to Swing Trading

    The swing trading style, between day trading and trend trading, may be a good one for beginners to try.
  3. Trading

    Introduction to Swing Charting

    Discover why traders use swing charts, how these charts are constructed and how to start using them.
  4. Trading

    Is Scalping Or Swing Trading Right For You?

    A look at how scalping strategy is different from a swing trading strategy.
  5. Trading

    ETFs With Major Recent Breakouts

    These ETFs have all experienced a major technical breakout recently.
  6. Trading

    Rounded Bottom Could Mean a Rally for These Stocks

    These stocks are showing a rounded bottom – a powerful pattern that often goes unnoticed until it is too late.
  7. Trading

    Short-Term Breakouts Point to Higher Prices in These Stocks

    These stocks are all in uptrends and recently broke out of short-term consolidations, signaling another up wave.
  8. Trading

    Divergence: The Trade Most Profitable

    Comparing price swings helps traders gain insight into price momentum.
  9. Personal Finance

    A day in the life of a day trader

    Day trading has many advantages, and while we often hear about these perks, it's important to realize that day trading is hard work.
  10. Trading

    Catching A Falling Knife: Picking Intraday Turning Points

    Trying to pick the absolute top and bottom points can lead to excessive losses. This strategy allows you to hedge your risk.
Frequently Asked Questions
  1. How Are Convertible and Reverse Convertible Bonds Different?

    Determine the difference between a regular convertible bond and a reverse convertible bond, including how this is affected ...
  2. How Does a Person Gain From an Investment?

    Find out the two main ways in which a person gains from an investment, capital gains, and investment income. Learn how stocks ...
  3. What Is 'Hot Money?'

    Learn how investors are attracted to "hot money" where funds are actively seeking short-term returns, often in high-interest ...
  4. What personal items am I allowed to bring with me into the CFA exam testing room?

    Aside from the required examination materials -- which must be kept on their desks -- find out what else test-takers are ...
Trading Center