Pathshala: Swing Trading

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<span style="font-family: "arial" , "helvetica" , sans-serif;"><span style="font-size: x-large;"><b>Trading Methods</b></span></span></h2>
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<span style="font-family: "arial" , "helvetica" , sans-serif;"><span style="font-size: small;"><span style="color: black;">There are several different
trading methods that can be used to <span style="font-size: small;">trade. Here three main popular trading m<span style="font-size: small;">e</span>thod<span style="font-size: small;">s given below: </span></span></span></span></span></div>
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<span style="font-family: "arial" , "helvetica" , sans-serif;"><span style="font-size: small;">1. Swing Trading</span></span></h2>
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<span style="font-family: "arial" , "helvetica" , sans-serif;"><span style="font-size: small;">2. Day Trading.</span></span></h2>
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<span style="font-family: "arial" , "helvetica" , sans-serif;"><span style="font-size: small;">3.</span><span style="font-size: x-large;"><span style="font-size: small;"><span style="font-size: small;"><b>Position Trading</b></span></span></span><span style="font-size: small;"><span style="font-size: small;"> / </span>Trend Trading.</span></span></h2>
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<u><i><span style="font-family: "arial" , "helvetica" , sans-serif;"><span style="font-weight: 400;"><b><span style="font-family: "arial" , "helvetica" , sans-serif;">1.</span> Swing Trade</b></span></span></i></u></h2>
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<span style="font-family: "arial" , "helvetica" , sans-serif;"><span style="font-weight: 400;"><b>What is Swing Trade? </b></span></span></h4>
<span style="font-family: "arial" , "helvetica" , sans-serif;"><span style="font-weight: 400;">Swing Trading</span><span style="font-weight: normal;"> 
      takes advantage of brief price swings in strongly 
      trending stocks to ride the momentum in the direction of 
      the trend.</span></span><br />
<ul style="text-align: left;">
<li>
       
<span style="font-family: "arial" , "helvetica" , sans-serif;"><span style="font-weight: 400;">Swing trading combines the best of two worlds -- the 
      slower pace of investing and the increased potential 
      gains of day trading. </span></span><br />

</li>
<li>
<span style="font-family: "arial" , "helvetica" , sans-serif;"><span style="font-weight: 400;">Swing traders hold stocks for days 
      or weeks playing the general upward or downward trends. 
       </span></span><br />

</li>
<li>
<span style="font-family: "arial" , "helvetica" , sans-serif;"><span style="font-weight: 400;">Swing Trading is not high-speed day trading. Some people 
      call it momentum investing, because you only hold 
      positions that are making major moves. </span></span><br />

</li>
<li>
<span style="font-family: "arial" , "helvetica" , sans-serif;"><span style="font-weight: 400;">By rolling your 
      money over rapidly through short term gains you can 
      quickly build up your equity.</span></span><br />

</li>
</ul>
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<span style="font-family: "arial" , "helvetica" , sans-serif;">How does Swing Trading work?</span></h4>
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<li><span style="font-family: "arial" , "helvetica" , sans-serif;"><span style="font-weight: 400;">The basic 
       strategy of Swing Trading is to jump into a strongly 
       trending stock after its period of consolidation or 
       correction is complete.<br /> </span></span></li>
<li><span style="font-family: "arial" , "helvetica" , sans-serif;"><span style="font-weight: 400;">Strongly trending 
       stocks often make a quick move after completing its 
       correction which one can profit from. <br /> </span></span></li>
<li><span style="font-family: "arial" , "helvetica" , sans-serif;"><span style="font-weight: 400;">One then sells 
       the stock after 2 to 7 days for a 5-25% move. This 
       process can be repeated over and over again. One can 
       also play the short side by shorting stocks that 
       fall through support levels. <br /> </span></span></li>
<li><span style="font-family: "arial" , "helvetica" , sans-serif;"><span style="font-weight: 400;">In brief a Swing 
       Trader's goal is to make money by capturing the 
       quick moves that stocks make in their life span, and 
       at the same time controlling their risk by proper 
       money management techniques.</span></span></li>
</ul>
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What are the advantages of Swing Trading?</span></h4>
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<li><span style="font-family: "arial" , "helvetica" , sans-serif;">Swing Trading combines the best of two worlds -- 
       the slower pace of investing and the increased 
       potential gains of day trading. <br />
 </span></li>
<li><span style="font-family: "arial" , "helvetica" , sans-serif;">Swing Trading works well for part-time traders — 
       especially those doing it while at work. While day 
       traders typically have to stay glued to their 
       computers for hours at a time, feverishly watching 
       minute-to-minute changes in quotes, swing trading 
       doesn't require that type of focus and dedication.
       <br />
 </span></li>
<li><span style="font-family: "arial" , "helvetica" , sans-serif;">While Day Traders gamble on stocks popping or 
       falling by fractions of points, Swing Traders try to 
       ride "swings" in the market. Swing Traders buy fewer 
       stocks and aim for bigger gains, they pay lower 
       brokerage and, theoretically, have a better chance 
       of earning larger gains.<br />
 </span></li>
<li><span style="font-family: "arial" , "helvetica" , sans-serif;">With day trading, the only person getting rich 
       is the broker. "Swing traders go for the meat of the 
       move while a day trader just gets scraps." 
       Furthermore, to swing trade, you don't need 
       sophisticated computer hook-ups or lightning quick 
       execution services and you don't have to play 
       extremely volatile stocks.</span></li>
</ul>
<span style="font-family: "arial" , "helvetica" , sans-serif;">We believe that the Swing Trading method is a better 
      way for the individual investor to attain superior 
      investment results through short-term trading in the 
      stock market. This trading strategy has been carefully 
      designed for the needs of the individual investor who 
      does not have the resources that institutions and 
      professional money managers may have.</span><br />
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How to Swing Trade? </span></h4>
<span style="font-family: "arial" , "helvetica" , sans-serif;">To fully understand what swing trading really is, you 
      first need to understand what up/down trends are. </span><br />
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<span style="font-family: "arial" , "helvetica" , sans-serif;"><b>Up Trend:</b> Simply put an uptrend is a series of 
      higher highs and higher lows. In other words, an uptrend 
      is a series of successive rallies that extend though 
      previous high points, interrupted by declines which 
      terminate above the low point of the preceding sell-off. 
      Often the high of the last "swing" in the trend will 
      serve as support for the next low. These areas are 
      circled.</span><br />
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<span style="font-family: "arial" , "helvetica" , sans-serif;"><b>Down Trend:</b> Simply put a downtrend is a series of 
      lower highs and lower lows. In other words, a downtrend 
      is a series of successive declines that extend though 
      previous low points, interrupted by increases which 
      terminate below the high point of the preceding rally. 
      Often the low of the last "swing" in the stock's trend 
      will serve as resistance for the next high. These are 
      circled.</span><br />
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<span style="font-family: "arial" , "helvetica" , sans-serif;"><b>Long Swing Trades:</b> Once an uptrend has been 
      identified a swing trader looks for buying opportunities 
      in that stock. This can be identified when the stock 
      experiences a minor pullback or correction within that 
      uptrend. The swing trader then activates a trailing 
      buy-stop technique. If prices break out above the 
      trailing stop loss, you will be stopped out and long in 
      the trade. If prices decline, your buy-stop will not be 
      touched.</span><br />
<span style="font-family: "arial" , "helvetica" , sans-serif;"><br /></span>
<span style="font-family: "arial" , "helvetica" , sans-serif;"><b>Short Swing Trades:</b> Once an downtrend has been 
      identified a swing trader looks for selling 
      opportunities in that stock. This can be identified when 
      the stock experiences a minor rally within that 
      downtrend. The swing trader then activates a trailing 
      sell-stop technique. If prices break down and fall below 
      the trailing stop loss, you will be stopped out on the 
      short side. If prices rally, your sell-stop will not be 
      touched.</span><br />
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<u><i><span style="font-family: "arial" , "helvetica" , sans-serif; font-size: large;"><span style="font-size: large;">2. Day Trading.</span></span></i></u></h2>
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<span style="font-family: "arial" , "helvetica" , sans-serif;">What is Day Trading?</span></h4>
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<li><span style="font-family: "arial" , "helvetica" , sans-serif;"><b>Day Trading</b> involves taking a 
         position in the markets with a view of 
         squaring that position before the end of 
         that day. <br />
 </span></li>
<li><span style="font-family: "arial" , "helvetica" , sans-serif;">A day trader typically trades 
         several times a day looking for fractions of 
         a point to a few points per trade, but who 
         close out all their positions by day's end. 
         <br />
 </span></li>
<li><span style="font-family: "arial" , "helvetica" , sans-serif;">The goal of a day trader is to capitalize on 
         price movement within one trading day.<br />
 </span></li>
<li><span style="font-family: "arial" , "helvetica" , sans-serif;">Unlike investors, a day trader may hold 
         positions for only a few seconds or minutes, 
         and never overnight.</span></li>
</ul>
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         <span style="font-family: "arial" , "helvetica" , sans-serif;"><b>What day trading really means.</b></span></h4>
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<span style="font-family: "arial" , "helvetica" , sans-serif;">The term "day trading" is a widely misused 
         and misunderstood term. Real day trading 
         means not holding on to your stock positions 
         beyond the current trading day; in other 
         words, not holding any position overnight. 
         This is really the safest way to do day 
         trading because you are not exposed to the 
         potential losses that can occur when the 
         stock market is closed due to news that can 
         affect the prices of your stocks.<br /><br />Unfortunately, many people who claim to be 
         "day trading," hold stocks overnight because 
         of fear or greed, thus setting themselves up 
         for the catastrophic elimination of their 
         capital. When day trading currencies, the 
         term "day trading" changes slightly. Since 
         currencies can be traded 24-hours-a-day, 
         there is no such thing as "overnight" 
         trading. Thus, you can have open positions 
         for longer than a day with active stop 
         losses that can be activated at any time.</span></div>
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         <span style="font-family: "arial" , "helvetica" , sans-serif;"><b>Day trading can be further subdivided 
         into a number of styles, including:</b></span> </h4>
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<li><span style="font-family: "arial" , "helvetica" , sans-serif;"><b>Scalpers:</b> This style of day trading 
         involves the rapid and repeated buying and 
         selling of a large volume of stocks within 
         seconds or minutes. The objective is to earn 
         a small per share profit on each transaction 
         while minimizing the risk. <br /> </span></li>
<li><span style="font-family: "arial" , "helvetica" , sans-serif;"><b>Momentum Traders:</b> This style of day 
         trading involves identifying and trading 
         stocks that are in a moving pattern during 
         the day, in an attempt to buy such stocks at 
         bottoms and sell at tops.</span></li>
</ul>
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<span style="font-family: "arial" , "helvetica" , sans-serif;">
         Advantages of Day Trading</span></h4>
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<li><span style="font-family: "arial" , "helvetica" , sans-serif;"><b>Zero Overnight Risk:</b> Since positions 
         are closed prior to the end of the trading 
         day, news and events that affect the next 
         trading day's opening prices do not effect 
         your portfolio.<br /> </span></li>
<li><span style="font-family: "arial" , "helvetica" , sans-serif;"><b>Increased Leverage:</b> Day Traders have 
         a greater leverage on their trading capital 
         because of low margin requirements as their 
         trades that are closed in the same market 
         day. This increased leverage can increase 
         your profits if used wisely.<br /> </span></li>
<li><span style="font-family: "arial" , "helvetica" , sans-serif;"><b>Profit in any market direction:</b> Day 
         trading often will utilize short-selling to 
         take advantage of declining stock prices. 
         The ability to lock in profits even as 
         markets fall throughout the trading day is 
         extremely useful during bear market 
         conditions.</span></li>
</ul>
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<u><i><span style="font-family: "arial" , "helvetica" , sans-serif; font-size: large;"><span style="font-size: large;"><b>3. Position Trading | Trend Trading</b></span></span></i></u></h2>
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<span style="font-family: "arial" , "helvetica" , sans-serif;">What is a Trend?</span></h4>
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<span style="font-family: "arial" , "helvetica" , sans-serif;"><b>A trend is nothing but the general direction of 
      the price of an asset or market in general.</b></span>
      <span style="font-family: "arial" , "helvetica" , sans-serif;"><br />
      A trend can apply to equities, bonds, commodities and 
      any other market which is characterized by a long-term 
      movement in price or volume.</span></div>
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<span style="font-family: "arial" , "helvetica" , sans-serif;">What is Trend Trading?</span></h4>
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<li><span style="font-family: "arial" , "helvetica" , sans-serif;">Trend trading is one of the most effective and easy 
      to use methods for making money in the market. Trend 
      trading success depends on identifying and catching the 
      trend after it has started and getting out of the trend 
      as soon as possible after the trend reverses.<br /> </span></li>
<li><span style="font-family: "arial" , "helvetica" , sans-serif;">Trend Trading involves taking a position in the markets 
      with a view of holding that position for weeks to months 
      for larger than normal gains. Trend traders or investors 
      generally trade the long term or secular trends and are 
      not concerned with the day to day market volatility.</span></li>
</ul>
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<span style="font-family: "arial" , "helvetica" , sans-serif;">Advantages of Trend Trading?</span></h4>
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<li><span style="font-family: "arial" , "helvetica" , sans-serif;">Trend trading is the fastest and most risk free way 
      to make money in the markets. In trend trading you can 
      identify a change of trend in the market as early as 
      possible, take your position, ride the trend and close 
      your position shortly after the trend reverses.<br /> </span></li>
<li><span style="font-family: "arial" , "helvetica" , sans-serif;">With Trend Trading it is very possible to catch 60 to 
      80% of many intermediate term and long term market 
      movements and thus create wealth for yourself and your 
      family. <br /> </span></li>
<li><span style="font-family: "arial" , "helvetica" , sans-serif;">Trend Trading will help you take large profits out of 
      the market, without having to watch the market or stocks 
      on a minute-by-minute or even a day-by-day basis.<br />
 </span></li>
<li><span style="font-family: "arial" , "helvetica" , sans-serif;">Whether you are a short-term day trader or a 
      long-term investor, we believe incorporating Trend 
      Trading into your overall trading plan is a must. There 
      are two types of trades: "Income producing" trades and 
      "Wealth-building" trades. Swing trading and day trading 
      produce income, while Trend Trading Picks is designed to 
      amass wealth. </span></li>
</ul>
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Trading Methods There are several different trading methods that can be used to trade. Here three main popular trading m e thod s ...