Swing Trading Stocks – An Introductory Guide to Swing Trading Stocks

Swing Stock Trading It has become increasingly popular with home based investors and beginning traders. You can make money from swing trading and the most common way is to master it. The more skillful you are, the better your chances of success.

But you have to start somewhere, right? Because of this, we need to clear up persistent misconceptions and give you the right tools to get you started. With experience and training, you will create your own stock swing trading system.

What is swing trading?

What is swing trading? Many people confuse swing trading, day trading, and buy-and-hold investing. The fact is that they are quite different on several levels.

In a nutshell, swing trading is about profiting from security price movements that, compared to day trading or buy-and-hold investing, last from a few days to a few weeks, a month or two, at most. .

In day trading, security price movements span only one day and traders do not hold any positions overnight.

What are shares?

Most of the time, shares take the form of ownership shares in a corporation. There are two types of shares: common shares and preferred shares.

Common shares are voting shares that give the shareholder the right to vote on the affairs of the company.

Preferred shares are a bit different than voting shares in that they do not have voting rights. However, they take precedence over common stock in paying dividends.

That said, there is much more to say on the subject, so I encourage you to read more about the stock market.

how to swing trade stocks

Swing traders rely heavily on different strategies to uncover new opportunities that they can profit from. Your choice regarding strategies largely depends on your temperament and your approach to the markets. There are two main strategies swing traders can use: fundamental analysis and technical analysis.

Understand fundamental analysis

The easiest way to understand what fundamental analysis is is to identify the common questions that fundamentalists constantly ask before entering a position.

• Has the value of the company increased or decreased compared to its peers?
• What is your growth rate? Is it worth the investment?
• What is your return on equity and debt levels?

By constantly asking these questions, the fundamental analyst can get an idea of ​​the company’s stock price and make the appropriate decision based on that.

Understand technical analysis

Technical analysts are trained to read the price chart of a stock with volume to accurately determine the likely direction of that stock. The technical analyst estimates the direction of a security by analyzing the strength of buyers and sellers in the markets.

Taking this approach means doing a thorough analysis of chart patterns and indicators.

Which to choose

Most experts agree that both strategies should be used together. In fact, they complement each other and together they ensure a complete analysis of the company’s position in the markets.