What Are the Best Swing Trading Strategies?

by Jason Chavis; Updated September 26, 2017
What Are the Best Swing Trading Strategies?

Many investors claim to know the best swing-trading strategies. There are various market tools to help you choose the right stocks, and advice on when to buy and sell. However, swing trading is based on a certain amount of fundamentals that have strategies of their own. Following these strategies will ensure the proper execution of swing trading.

Function

The best swing-trading strategies are those a trader can implement for the highest possible financial gain. He should be able to determine the best time to purchase stocks (and which stocks to purchase in the first place) if he utilizes these strategies. Most of them also teach an investor to find the most reliable sectors of the economy in which to trade, and which ones will provide the largest returns at the moment.

Considerations

The most basic swing-trading strategy involves preparation for the trading week. The best investors prepare a weekend ahead of time so they are ready for the opening bell on Monday morning. Using a market-timing strategy helps the investor determine if she should focus on the long or short side of the market that week. The best swing-trading strategists receive data feeds regarding the positioning of the market and chart its logical course. This helps a swing trader determine if the market is going to rally or not. When a market rallies, roughly 75 percent of stocks rise, while the opposite is true when the market falls.

Features

Scanning and charting stocks is an important aspect of swing trading. An investor has a variety of channels in which to obtain stock charts, most of which will tell him whether to stay toward the short or long side of the market. When you are scanning for stocks to purchase, the most valued securities are those that have pulled back into the Trading Action Zone, the time frame in which the stock should perform best for a swing trader. These are stocks that are in the stage of an immediate down trend but have the characteristics of going back up again. If one of these stocks is trading on either the short or long side of the market, it will go down; the key is to purchase low and sell on an uptick.

Significance

Knowing the economic calendar is key to determining the best swing-trading strategies. It's important to know what reports are scheduled to come out in the near future that could have an effect on the market. Different industry groups have different time periods in which they traditionally perform well in the market. Understanding these fluctuations and charting the characteristics of these stocks helps an investor make wise decisions.

Misconceptions

An unappreciated strategy for a swing trader is the choice to invest. During periods of volatility, there is a lot of money to be made. However, if the trading choices an investor has made recently have failed to produce profit, the swing trader may choose to avoid the market for a time. During these periods, an experienced swing trader gathers data and continues to do research by charting different facets of the market. Keeping your portfolio in cash for a period of time is considered by many to be a wise strategy.

About the Author

Jason Chavis has been a professional freelance writer since 1998. He is the author of four books, two movies and a play as well as numerous articles for "Scientific American," The History Channel, City Pages and "The Onion." In 1996, Chavis won the award for "best science fiction/fantasy" from the River Valley Writer’s Conference.

Photo Credits

  • Wikimedia