InvestorQ : What is Swing Trading and how is it different from the normal day trading that we all are used to?
swati Bakhda made post

What is Swing Trading and how is it different from the normal day trading that we all are used to?

Answer
image
Dia Deshpande answered.
2 years ago
Follow

While day trading focuses on initiating and closing out the positions intraday, the focus of swing trading is more on identifying an underlying trend and play along much longer. You may have seen stocks that show rapid movements in a short span of time. Even large stocks like Bajaj Finance, Ashok Leyland and Titan move rapidly when the momentum is either in their favour or against them. But, such movements do not happen intraday and the positions need to be held for slightly longer. That is what the swing trader must be prepared for.

What can you gather from the 1 year chart of HPCL? The stock of HPCL moves exactly like a mirror image of the price of Brent Crude in the international market. That is because a fall in price of crude is positive for HPCL because it reduces the probability that the government will ask these downstream oil companies to bear the burden of oil subsidy. What does that mean for swing trading? Since oil is a commodity, it typically moves like a commodity and is influenced by the forces of demand and supply. That makes oil more predictable in terms of price movements. A swing trader can identify such short term swings in the price of crude oil and then use them to take short term positions in HPCL. This is an example of how Swing Trading works in practice. Typically, the swing trader will also look at a number of technical factors like supports, resistances, moving averages and oscillators before getting confirmation of a swing trade.

1 Views