What is Swing Trading?


10:55 AM

1 min read
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Recently, the Indian stock market has been witnessing volatility amid the ongoing Lok Sabha elections and swing trading has been trending on the internet.

About Swing Trading: 

  • It is a style of trading where investors keep their positions for longer than a single day, typically holding onto stocks for several days or weeks.
  • The goal of swing trading is to capture gains in a stock's value as it swings up and down.
  • A swing trader will look for stocks with high volume (a lot of trading activity) and volatility (price movement).
  • The entry into a swing trade involves setting up stop-loss orders (to limit potential losses) and target prices (to capture profits) based on support and resistance levels.
  • Swing traders buy at support (lower price level) and sell at resistance (higher price level) anticipating the stock's price to swing back and forth within these bounds.
  • What's the objective of swing trading?
    • The primary goal of swing trading is to profit from short- to medium-term fluctuations in stock prices.
    • Traders aim to enter and exit positions quickly, typically holding stocks for 2 days to a few weeks.
    • Swing traders capitalise on both upward and downward movements in the market, seeking to take advantage of trends and momentum.
  • Swing trading offers flexibility and can be less time-consuming compared to day trading. Traders can benefit from short- to medium-term gains and adjust their positions swiftly based on market conditions.

Q1: What is Nifty?

NIFTY is a market index introduced by the National Stock Exchange (NSE). It is a blended word – National Stock Exchange and Fifty coined by NSE. It was established in 1996 with the name CNX Nifty. Further, in 2015, it was renamed Nifty 50.

Source: Explained: What is swing trading