Swing Trading And How To Find The Best Markets

There are a seemingly endless number financial markets around the world that can be traded

. Thanks to the advances in technology and computing power over the years, traders now have at their finger tips more markets to trade than ever before. Perhaps the best trading style that a trader could ever use with all these markets is that of swing trading. Swing trading is the only style of trading which reduces the risk a trader faces while at the same time offering a high rate of return. Swing trading is not limited to any specific market and can be used on any market around the world. Does this mean that all and any markets can be traded equally well using this style? Unfortunately, no. However, there are two factors that you as a trader can look for to make sure that a market is best suited to swing trading so you can swing trade with maximum profit potential.

First, to swing trade a stock or other financial instrument it must show signs or have a tendency to trend. Part of the reason why swing trading is such an effective trading style is because a core principle of how it works is that trades are placed in the direction of the major trend. If you aren't trading a market that has a trend then you are lacking a crucial component of this trading system. There are markets where there seems to be no trend with price jumping up and down with almost no reason as to why. Many markets move sideways without ever really showing a clear and definable trend, or at least not one that is tradable. Without price trending it makes it near impossible for swing traders to take tradable chunks or slices out of the market. Swing traders need a stock that trends or typical trends more than it moves sideways. This is necessary for you to be able to take slices out of the market with your trades.

Secondly, the stock must not be too volatile. Volatile stocks, while offering the potential of a good income if you happen to be on the right side of the trade, make it difficult to swing trade. Volatile markets jump around without almost no warning and this makes it extremely risky and dangerous for any trader no matter what style of trading they use. Another core component of swing trading is that it is a medium term trading style where trades are usually held for several days. Swing trading takes time and as a result if a stock moves too fast or too abruptly in any one direction, it does not give you time to plan your entry and exit. The best kind of market to trade is one that is traded heavily with price moving in fluid waves instead of knee jerk movements.

Anyone can swing trade stock as long as they first make sure that it is one that tends to trend more than it moves sideways and that it does not move abruptly or erratically without explanation. Keeping this in mind will help you to gain an edge over other traders and be profitable at swing trading.

by: Creztor Tessel

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