What is Swing Trading?
Swing trading is a trading style that holds positions for several days to several weeks, aiming to capture short-to-medium-term price moves or 'swings' in the market.
Swing Trading Explained
Swing trading requires less screen time than day trading and doesn't require the $25,000 minimum account balance. Trades are typically based on technical analysis, chart patterns, and momentum indicators. The main risk is overnight gaps, where the price opens significantly different from the previous close.
Real-World Example
A swing trader identifies a stock breaking out of a consolidation pattern at $75 on Monday. They buy 200 shares, set a stop loss at $71, and a target at $85. The stock reaches $84 by Thursday and they sell for a $1,800 profit.
Related Terms
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