Swing Trading & The Different Styles Of Market Trading
Do you know about swing trading? Swing traders ride the swings or oscillations that
markets make as the stock or currency pair pivots from one price level to another. This method of trading has been around for sometime and in recent years has gained massive popularity amongst traders. Swing trading is a style of trading that can be used on any market with impressive results. However, there are more ways to trade markets beyond just swing trading. The main three styles of trading are day trading, swing trading and trend or buy and hold trading. Swing trading is found in between day trading and buy and hold trading and is highly recommended, no matter what you trade. Let's take a look at the other styles and see why swing traders have the best odds to beat the market out of all the different kinds of traders.Day trading or day traders typically keep their trades confined to a single trading day, hence the name. All trades placed are done so between the morning open bell and they are all closed out by the time the final closing bell for the day is rung. Day traders believe that the best way to increase your odds when it comes to trading is to never hold a trade longer than one day. This sounds good in theory but in practice it fails to deliver. Opening and closing trades within such a short period of time does not give you sufficient time to trade the major trends in markets. You are trading nothing more than the daily noise and false market signals it creates. Scalping is also considered a day trading style of trading. While scalping can offer extremely high rates of return, it does so with very high risk levels. Trend traders, or buy and hold traders, usually involve trades being held for several weeks to months. A trader typically needs substantial trading capital to be able to make any decent profit from buy and hold trading.
Swing trading is a trading style that focuses on the medium term and usually has traders holding trades for several days, but typically less than a week. Do traders hold trades for longer periods? Of course, but this is just a general rule of thumb and when you have gained enough experience using this style you will be able to make the necessary judgement calls regarding how long a trade should be held for. Some markets are more suitable for swing trading and it is important that you are trading the right currency pair or stock. High rates of return with low risk is what make many traders swing trade. This is the perfect balance for trading profitably.
Only swing trading offers high rewards with low risk. Short term trading styles such as day trading and scalping subject traders to substantial risk. Trading short periods of time and time frames exposes a trader to noise in the market. Noise can be extremely difficult to trade as it is seemingly randomless and ruthless towards anyone that is new or jus beginning their trading career. Swing trading offers low risk but the potential to make substantial profits in both forex and stock markets.
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