Swing trading is anticipating a move either after a breakout or a reversal pattern that forms at support or resistance and staying with the stock until it gets to the next level of support or resistance. It’s a shorter term trading technique that takes smaller profits than riding a trend but these profits add up quickly.
Coupled with an exit strategy that really limits losses, swing trading allows the trader to maximize their profits.
With present market conditions the long term, buy and hold trader might be lucky to realize a profit of 10% in six months time as their stocks go through their periods of ups and downs. The swing trader however takes advantage of these price swings by entering and exiting with each move and taking the profits.
Learn how to swing trade with candlesticks.