Swing trading is a short- to medium-term strategy where traders hold positions for several days to weeks, aiming to profit from price swings during trending markets. It sits between day trading and long-term investing, using technical analysis, chart patterns, and trend indicators to find entry and exit points. This approach works well in moderately volatile markets, offering opportunities to capture medium-sized gains.
Key Points
- Aims to capture price swings over a period of a few days to weeks, not just intraday moves.
- Works best in trending markets with moderate volatility.
- Uses wider stop-losses and risk-reward ratios to manage trades effectively.
- Relies on tools like Moving Averages, RSI, MACD, Chart Patterns, and Price Action for trade decisions.
Time Frames Used
- Entry & Execution: 1-minute (M1), 5-minute (M5) charts
- Confirmation & Trend Analysis: 15-minute (M15), 30-minute (M30) charts
Example
- Buy Reliance at ₹2,500 → Exit at ₹2,660 after 5 days → ₹160 gain per share.
- Trade 200 shares → ₹32,000 profit before charges.