Swing trading makes profit from swings in price movement over short time frame. To make profit from swing trading, investor uses technical analysis, which observe the market price and volume. When price move up with high volume it is time to buy and when price move down with high volume then it is time to sell.
Money management is very important on swing trading. You have to cut your loss early. Usually when price drops 10 percent, then it is time to sell it. You must be discipline with this rule. That is the hard thing to do. Sometimes people emotion take control, and your mind can persuade you not to close your position, although it has drop more than 10 percent. Your mind might tell you to buy more and average down the price. This is very wrong. If it keep declined you will lose more money.
You also need the right timing to take profit. When price increase but volume drops significantly then it is the time to take profit. This condition means that the buying power is running out. So you need to close your position before other buyer close their position.
The key to successful swing trading is picking the right stocks and be discipline with your system. The best candidates are stocks that are actively traded, so that you can easily buy and sell the stock.
Swing trading is very easy for every one from beginner, intermediate to advanced traders. This strategy is mainly used by individual. Large institutions with large buying power can not use this strategy, because when they enter the position they might increase the price.
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