Getting latest data loading
X

Get trading opportunities to your inbox

There’s no charge for this.

If you enter your telephone number, we may call or message you occasionally with trading opportunities. You do not have to enter your phone number, and you can opt out at any time.
Home / Swing Trading

Swing Trading

Swing trading is a type of trading strategy meant to capitalise on market volatility. While positions are typically held longer than a day (normally falling between one and four days), many day traders also engage in this type of strategy. Swing trading, which can be utilised in both short and long positions, involves buying or selling an asset near the top or bottom price of the known volatility. Rather than focusing on the intrinsic value of an asset, swing trading uses technical analysis to determine trends. It is a speculative strategy, and trades are often completed using margin. Margin, of course, can multiply gains and losses and must be used carefully.

A swing trading strategy can be used on any type of asset, including equities, bonds and commodities. Regardless of the type of asset used, it is the market movements that are important. Highly volatile markets, for instance, are extremely well suited to this type of trade as they offer many entry and exit point.

While less common, swing trading can also be successfully used when markets are less volatile. The trader should be especially aware, however, of market trends in this scenario. Also, certain industries will be more suited to swing trading, depending on where they lie in their economic cycle.

Stock market trends, which are often found using chart analysis can be either upward, downward or range bound.  In an upward trend, stocks move upward over time, with a positive rate of change. However, this upward movement is intermediated with negative consolidations against the trend. The opposite is true for a downward trend. In longer period of time, upper and lower limits can be determined.  Swing trading utilises these intermediate consolidations, and limits as these are the points at which trading should occur. A moving average cross over, for instance is a very strong trading signal. When a short-term average crosses below a long term one, this is a sell signal. A strong buy signal is evident when a short-term trend line crosses above the long-term trend line.

It is important to manage risks when swing trading. This can be done be ensuring the asset is liquid, diversifying your portfolio, monitoring the asset closely, and using stop orders. Limiting your position size based on an absolute ceiling determined by capital willing to lose will also be helpful. If, however, the market and industry are trending there are clear indicators that a trade could be successful.

Swing Trading requires up to date charting and information so these trends can be determined and acted upon. The trading platforms at Accendo Markets are particularly well suited for this type of strategy, as they offer chart analysis and real time data. While swing trading is heavily based on chart analysis, it is important to take fundamentals into account as well to minimise the possibility of nasty surprises.

img
Latest Trading Opportunities

Upcoming UK100/250 Dividend List

View Thursday 17 September 2020

Week in Advance: Monday 21st - Friday 25th September

View Thursday 17 September 2020

Week in Advance: Monday 14th - Friday 18th September

View Thursday 10 September 2020

Upcoming UK100/250 Dividend List

View Thursday 10 September 2020

Week in Advance: Monday 7th - Friday 11th September

View Thursday 3 September 2020

Get Regular Trading Opportunities in your Inbox

Don't miss out on a trading opportunity!

Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage.
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 79% of retail investor accounts lose money when spread betting and/or trading CFDs with this provider. You should consider whether you understand how spread bets and CFDs work and whether you can afford to take the high risk of losing your money.