What is swing trading?

Swing trading means buying a stock to hold for a few days to a few weeks, to catch one "swing" in its price. It sits between day trading (in and out the same day) and investing (holding for years because the business grows).

How it differs from investing

An investor asks: is this a good business at a fair price? A swing trader asks: is the price likely to move enough in the next few days to be worth the risk? The swing trader cares about the chart, the market's mood and the exit plan far more than the company's ten-year future. Both are valid; they are different jobs, and mixing them up causes trouble: a "trade" that goes wrong should not quietly become a "long-term investment".

The three parts of every trade

1. Entry: the price where you buy, and the condition that must be true first (for example, a breakout above the last day's high).
2. Stop-loss: the price where you accept you were wrong and sell. You decide it before you buy.
3. Exit: a target price, a trailing rule, or a time limit.

On this site every tested trade uses the same plan: buy above the last high, stop 1.5 ATR below, target 2.5 ATR above, out after 10 days. The ATR guide explains what ATR means.

Why most people lose at it

Costs, taxes, over-trading and the habit of holding losers while selling winners early. Even professional swing traders often win only 35-50% of their trades; they make money because their winners are larger than their losers. Read expectancy next: it is the single most useful idea in trading.

A word on rules in India

Anyone giving buy or sell recommendations for Indian securities for money must be registered with SEBI as a research analyst or investment adviser. This site is education only: it explains methods and shows historical results, and never tells you what to buy.