18. Swing Trading
Swing Trading: Right in the Middle Between Day Trade and Trends
Stock market trading is a tricky thing, with confusing terminology and interesting jargon that may or not make sense for the novice trader or those who do not trade at all. Watching any financial show will lead you to think that you are listening to a foreign language program, with only key words or phrases that you understand coming out every now and then. So, the terms "swing trading" and "swing trader" might be something new, but in the end, no matter what kind of trading you do or what the designation is, the key to being a success is basically the same.
Swing trading makes use of short and long term knowledge, using both day trader habits and trends. Of course, swing trading can only be a successful trading method if you are picking the right stocks, but that is true with any type of stock trading. Experts recommend that swing traders focus on large cap stocks which force the swing trader to realize that after an upward trend, there will be a downswing as these markets tend to have extreme directional changes every few weeks or so.
The market does not only fluctuate up and down as certain stocks gain or lose strength, there are times where it becomes fairly flat with very few trades happening at all. It is during these moments that swing trading might be a favorable method to consider that the swing trader will be ready to catch the next upward spike and can ride out any down turns once the market begins moving again.
Of course, there are advantages and disadvantages of every trading method, and swing trading is no different. The experts claim that swing trading might be considered one of the best methods for the beginning trader to start with. It allows trading with a relatively small number of actual stocks, and usually provides enough movement every few days to keep interest high, without the huge highs and lows that can cause too much stress for the novice trader to deal with effectively. As long as you are willing to do your research and you know what your own personal budgetary limitations are, then swing trading can be a sound investment practice, giving slow, but steady returns on your initial layout.
Before beginning any foray into the stock market, make sure that you understand the information and jargon involved in the stock market and with trading in general. Review your own financial records and know what your investment limits are before proceeding. Speak with a broker or your financial planner before attempting swing trading or any other investment activity.