What is swing trading

Ted Capwell

The development of modern technology and a variety of ways to earn money without leaving your home / apartment, can not be considered solely as a positive phenomenon. Unfortunately, he has negative sides. And the main “minus” of the situation that has developed over the past 5-10 years is that in almost every field of activity there have appeared untruthful stories about how employers deceive performers, about hidden ways to earn fantastic income (of course, without doing anything) and other low-level “sensations” that have always been in demand among fans of the yellow press. An incredible “vinaigrette” from real facts and fictional stories / reviews is most often observed in the financial sphere: online trading, forex trading, cryptocurrency, binary options, etc. Therefore, the following information will certainly interest everyone who wants to test their strength at brokerage sites, including ordinary ones network users for whom it will be useful (as a source of new knowledge).


What is swing trading


General characteristics of swing trading

If you decide to engage in online trading, hoping to make it a reliable source of profit, you need to fulfill two mandatory requirements:

    • be well prepared professionally (at a minimum, study the terminology and practice, performing the financial operations you are interested in, using a demo account);

    • deal with all rumors, myths, recommendations, etc. that are relevant to work in the global financial market.

And the second point is often even more important than the first. We will not focus on it. We single out only the main idea that every trader should remember, regardless of experience, volume of investments and other factors related to the topic in question. Any trade operations and financial transactions that are carried out on specialized web resources are subject to the laws of a market economy. Therefore, all the talk about “lucky” strategies, opportunities to find out the cost of resources in a specified period of time, or to give a 100% forecast of the situation in the financial markets are tales of ordinary fraudsters. But some of them are so talented that even experienced professionals become victims of scam artists.

The above information allows us to conclude: in order to become a successful trader, you need to think rationally, not to believe in fairy tales and pay more attention to the recommendations of well-known economists and financiers. One such useful topic is the swing trading review.

This term was first used by J. Taylor, and it happened in the 50s. last century. In his book, the author considers the strategy of earning income on the stock exchange using swing trading (in the classical sense of this type of trading). Taylor focuses on the cyclical nature of the price of financial assets and the dynamics of its changes. The time interval in this case was considered as a minor factor. By the way, many modern financiers adhere to this point of view. Indeed, what’s the difference when you open / close a deal, if during this time you get the maximum profit?

Swing trading cannot be called a full-fledged strategy, such definition as a way of trading is more suitable for it. Theorists indicate that this method involves finding a transaction in the medium-term range (from 1-2 days to several weeks), which is completely untrue. There are situations when the trend of interest to the trader (or the trend, as it is called by young financiers) lasts several hours, and this again confirms Taylor’s opinion that time is a minor indicator.

The characteristic principles of swing trading are:

    • the trader follows the main trend, taking into account the cyclical nature of the value of the auction object;

    • the transaction is opened at the time of the rollback of the asset price to the main trend (that is, at the most favorable price for the trader);

    • based on technical analysis, you can accurately determine the time of closing a transaction (in simple words – you know when to start and finish a transaction, with the highest possible profit).

What a trader should know to maximize swing trading

    • In case of a sharp increase in the value of the asset (immediately after the opening of the transaction), it is best to get your profit and then open a new position.

    • Do not forget about the use of stop loss and take profit. Under normal conditions, these indicators allow you to avoid losses and get an income, the size of which fully corresponds to your forecast.

    • Swing trading does not provide for the use of additional strategies. The signal trader opens and closes the transaction or the operation ends automatically (in case of force majeure circumstances that cause the trader’s losses).

    • Be sure to follow the economic (political) news that can change the value of trading assets.

    • You should not transfer negative positions to the next day.

    • Any changes to the observed cycles should be carefully examined, and if any suspicions arise, it is best to close the deal.

  Among the general rules that experienced traders recommend to follow their budding colleagues, it is necessary to highlight 2 important points: stick to the ratio of your income and losses, like 2 to 1; do not lose on a single transaction more than two percent of the total amount of your capital.

After studying the above information, it will be much easier for you to understand the essence of swing trading and determine how this method corresponds to your experience and the strategies used. And one more important point – the trading method under consideration makes it possible to work on brokerage platforms, devoting this issue no more than 1 hour per day. While receiving a good profit, without additional risks.


“General Risk Warning: Binary options and cryptocurrency trading carry a high level of risk and can result in the loss of all your funds.”