The term swing trader usually refers to anyone who takes positions based on support and resistance on a chart, regardless of the time-frame that they trade in. But generally it is used to describe a non-daytrading approach, where positions are held for days or maybe weeks. Personally, I am open to holding positions for any length of time, as long as they produce the average gains that I am seeking for the time held. However, I am usually prone to closing positions and booking profits sooner rather than later. I maintain several different brokerage accounts that I use for trading different time-frame positions.
These are positions that are held for months, maybe even years under the right conditions. The trade setups present themselves on both the monthly and the weekly chart, and they are entered at a good point on the daily chart. Good research on fundamentals is also taken into serious consideration. The setup I am looking for here is a long, tight basing pattern that finally breaks out on good volume, with a very high long-term gain potential.
These positions are for weeks, or maybe even months under the right conditions. The trade setups appear on the weekly chart and also on the daily chart, and they are entered at an optimal point on the daily chart (with an eye on the hourly chart as well). A quick look at basic fundamentals is sometimes considered. Pullback entry early in a new trend and major reversal patterns are the most common setups.
Swing trade positions are held for days, or maybe even weeks under the right conditions. The trade setups occur on the daily chart and are entered at a good point on the hourly chart. The weekly chart is consulted to make sure no immediate obstacles loom. Fundamentals are not considered. Different high-odds pattern setups are considered, as long as the risk/reward ratio is favorable.
There are actually quite a few different approaches to daytrading. The most active is known as scalping and looks to cash in 10-cent moves on 2000 or more share trades. One step above that is momentum trading, which will sell at the 10-cent level only if the move starts to fade, otherwise holds until the move starts to reverse or the end of the day, whichever comes first. There are those looking for 15-minute to hour long positions, and those looking to hold for several hours. I am partial to the momentum method, which doesn't tie you into any pre-determined holding period. This endeavor requires quite a serious resolution to go about properly, and of course you must be well versed in technical analysis as well as reading momentum on the time and sales screen.
Developing your own personal style is what will make you successful. You will naturally adapt to certain strategies and pattern setups, which is where you should concentrate your efforts. You are going to make some bad decisions early in your career, so stay defensive and sell losers quickly until you really start to hit your groove. I don't mess with thinly traded issues (less than 100,000 per day), and I am weary of stocks priced under $10 for swing and position trades. Here are my favorite strategies for finding good setups. Look at these ideas and explore others as well - when you have got something down to a science, please join the message forum and share your trading ideas.
Pay attention to which sectors are outperforming and try to get on board with an under-performing sector when it begins to come back in favor, or go short with an outperforming sector when it becomes exhausted. This can be done with ETF's, Holders, and even mutual funds as well as individual stocks. If trading with individual stocks, choose the strongest one in the sector if you are going long.
"Earnings season" happens 4 times per year, and the majority of it is crammed into about a three-week time frame. What you do here is find companies with rising earnings whose next report is expected to be an increase again, and you buy on a bull-flag type of pullback in an obvious uptrend a few weeks before the report date. This gets you on board for at least some of the "buy the rumor sell the fact" run-up that many of these stocks will go through - sell before the earnings are reported no matter what!
Many stocks that are splitting will make a run at some point in the weeks preceding the split. The best candidates are splitting 2:1 or better, have buy recommendations from the analysts, and are in a 45o uptrend on the daily chart. Look for a low volume pullback for entry, my favorite spot is a bounce off of the 20 day moving average. You can hold these plays through the split date if the chart still looks good, although I prefer selling them before. If you learn to do this well and do nothing but play splits you can usually make your 2.5% average monthly return in any non-bear market environment.
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