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Swing tarding is a method of making money
in stock market by making use of human psychological and
emotional effect.
The swing traders hold the stock when the
price is rising and simply switch to another stock when the
trend is reversed.
First step in swing trading is to choose
the right stock.
Stock that makes a new high will experience
profit taking activities, and there is a strong likelihood that
stock price will increase further to retest the previous high.
The profit taking activities will create
low risk opportunity to buy stock from other traders who fear
the price will drop.
Trade in a stable market condition, simply
because the variables are minimal leaving the natural price
movement.
Your job as swing trader is to indentify
the turning points and sell into strength or buy into
weaknesses. You can be holding your stocks anywhere from two
days to two weeks.
The advantages of swing trading
It is not stressful as day trading
Takes advantage of other traders weaknesses
(beginners and novice traders)
Institutional fund managers unable to use
this strategy due to their bulk holding entities.
Limited risk for not holding the stock too
long
The disadvantages of swing trading
You need to indentify exactly when to buy,
what is the stop loss limit if fails and when to sell for
profits. To do this you need to be expert in asset allocation
and risk managment since everything it is all about
probabilities.
To get started with great success you need
to have advanced but friendly stock charting software as Swing
Tracker which come with a price.
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