Swing Trading

Swing Trading:
Swing traders also go Long or Short the market. They will look to hold their position from 2-60 days. A swing trader normally analyses daily and weekly price charts and is looking for 2 things.

1) A support level (to go Long at) or a resistance level (to go Short at)
2) A trend-line break (used to time the entry)

A support level is a place where the stock price has fallen to then bounced. The bounce is for 2 reasons. One is because at that level people are unwilling to sell their asset and the second is because several buyers step in at that price and buy based on their perceived value of the asset. The more often the stock has fallen to that price level and bounced the stronger the support.

A resistance level is a place where the stock price had risen to then buyers lost interest. The more often buyers lose interest at a particular price level the stronger the resistance. Once the owners of this asset see that there are no more buyers at a certain (high) price point they are then willing to sell their asset for less causing the price to continue to fall.

A swing trader wants to BUY at SUPPORT and SELL at RESISTANCE!

The trend-line is used to time the entry. A trend-line break signals a change in direction.

To see some live examples go to http://www.how2tradestock.com/ and visit the ‘Technical Trading 101′ section of the site.

I like to use Swing Trading with a focus on Support, Resistance & Trends.

- Steve-