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Who is a swing trader?

Trading approaches can be categorized by several different trading strategies or "trading styles", such as day trading, investing, and also, swing trading.

Swing trading is a trading strategy aiming at researching and choosing, and "riding" trending price movements (price swings), either upward or downward ones. Swing traders use technical analyses during a trading session, mostly on stocks, to find good entry points to hold a position for days or weeks. The goal for this strategy, is to speculate and choose a right trend to ride, maximizing profits, finding and executing an exit point just before the trend changes.

A swing trader sits between a day trader and an investor when it comes to "holding time". A day trader would only hold a position for a few hours, but not over a day. An investor is looking for opportunities to hold positions for years. A swing trader is something inbetween, from a few days to a few weeks.

Apart from the definition above, there are also alternative summaries of swing trading. Generally, all positions that take longer than a day can be described as swing trading. To put it extremely simple - index investors or ETF traders will try to speculate on long-term "swings" of a price movement, whereas swing traders do the same, only for one security, and on a shorter timeframe.

Who is a Swing Trader?
What do swing traders do? - Swing points, instruments

As the name suggests, swing traders look for price trends, or "swings". Every trend has a "swing high" and a "swing low".

For example, the highest point in a given timeframe just before the trend turns is called the "swing high". The lowest point until a trend is in a downwards slope before turning back is called a "swing low".

In between swings, the swing traders aim to have positions matching the trend, retaining and holding this over a day. It depends on the trader whether they'd choose currency pairs or stocks to trade on.

For example, some traders prefer highly volatile stocks, as instruments with more volatility will travel a bigger range, leading to better entry and exit points. Also, such instruments have lots of movements to anticipate on. 

It is also possible for forex traders to identify trends and trading opportunities on a forex market.

Swing trading takes an effort o pinpoint trends, swing traders are actively researching support and resistance levels.

Support levels = a price level which an asset "did not break through" over a period of time

Resistance levels = a price level under which an asset did not drop over a period of time

Who is a Swing Trader?
A brief on swing trading strategies

To understand the definition above, let's break down the bolded terms.

Trading strategy = a systematic method of how, when and what to buy or sell on the markets to make profit.

Technical analysis = a method to evaluate and assess probabilities on future price changes based on statistical data, focusing solely on the price graph of given assets. Traders using technical analysis will try to anticipate future changes based on historical marked data, patterns, indicators.

Entry point = a favourable price point where a trader or investor enters a position

Exit point = the price point where a trader or investor exits a position

Swing trading is a simple strategy, and easy to exercise. However, don't forget that your capital is at risk, as market movements are not 100% predictable.

Who is a Swing Trader?
Is Swing Trading better than day trading?

When it comes to the swing trading vs day trading debate, it is hard to tell. This is dependent on what you look for as a trader.

The difference between day trading and swing trading is solely the timeframe, as holding a position for more than a day can count as swing trading. So all in all, it is dependent on the trading personality - if you feel you are the more patient time, swing trading could work, otherwise feel free to go with day trading, but be sure to know the risk you are facing with all trading.

Another difference is, that a day trader closes a position before markets close to avoid overnight risks.

Who is a Swing Trader?
What else do you need to know about swing trades?

Want to know more about swing trades before deciding where to head next in your trading journey? We are going to release some more content about the topics below:

  • Swing trading strategies
  • The tools of swing traders

Stay tuned!

Author of this article

Bence András Rózsa

Author of this article

Bence’s purpose is to help you to understand the logic behind financial services. In his master’s studies, he specialised in business economy and finance to be able to give you a clear picture of the brokerage world. Having reviewed multiple brokers and robo-advisor services, his goal will always be to guide you in the world of investing as it is.

Bence András Rózsa

Broker Analyst

Bence’s purpose is to help you to understand the logic behind financial services. In his master’s studies, he specialised in business economy and finance to be able to give you a clear picture of the brokerage world. Having reviewed multiple brokers and robo-advisor services, his goal will always be to guide you in the world of investing as it is.

Everything you find on BrokerChooser is based on reliable data and unbiased information. We combine our 10+ years finance experience with readers feedback. Read more about our methodology

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