Swing trading is a style of trading that attempts to capture gains in a stock within one to ten days.

It is exactly as it sounds, traders oscillate from one trade to another, swinging and hoping that the traders have correctly identified the type of market correctly.    Unfortunately the most accurate insight into trends is viewed in retrospect.

It is a short term market strategy rather than long term. Success depends on correctly identifying which market is currently being experienced and whether to swing trade or invest long term.

Swing traders are not looking to hit the jackpot with a single trade and are not concerned about perfect timing to buy a stock exactly at its bottom and sell exactly at its top or the other way round. They wait for the stock to hit its baseline and confirm its direction before they make their moves. It can become more complicated when a stronger up-trend or down-trend is at in operation. A trader may go long when the stock jumps below or wait for the stock to go back up in an uptrend.

In order to make a profit the swing trader will want to exit the trade as close as possible to the upper or lower channel line without being overly precise which may cause the risk of missing the best opportunity. In a strong market, when a stock is exhibiting a strong directional trend, traders can wait for the channel line to be reached before taking their profit, but in a weaker market they may take their profits before the line is hit.

Swing trading is a good trading style for beginning traders but still offers significant profit potential for intermediate and advanced traders. Swing traders can realize sufficient rewards on their trades after a couple of days keeping them motivated but their long and short positions of several days are of ideal duration so as to not lead to distraction. In contrast with Day Trading where dozens of stock per day can be traded, Swing Trading can be a perfect medium between the two extremes.

There are risks involved, however, in that prices may break the channel and that swing traders buy or sell at the worst time and lose invested capital. The 'preservation of capital' as a paramount consideration across all trading, and also applies when swing trading.

Other risk factors exist which are inherent in equities or financial instruments trading. These are market risk, sector risk, and company risk. Swing trading tends to be less risk and can be rather profitable.

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