What is a swing trade?

In: Q&A

22 Jun 2012

We have received quite a few questions regarding our swing trade ideas so we thought we would put together some answers to the most common questions.

Q) What is a swing trade?
A)  A swing trade is short term in nature typically lasting between days to a week. The goal is to capture $1 to $5 dollars from the natural ebb and flow of the market. We tend to focus our swing trade opportunities on break outs, break downs, and continuation plays. This is where we feel we have the highest probability of hitting our targets.

Q) Why Swing Trade?
A) Swing trades if entered and exited properly tend to be lower risk trades that have a high probability of hitting at least target #1. Because these trade ideas come with entry prices, stop loss prices and exit prices the orders can be set to trigger automatically with your online broker so you dont need to watch the market all day.  Swing trades are also a great way to hit singles which we feel is the best way to build your trading account.

Q) What does Buy Above or Sell Below a specific price mean?
A) This means that even though we put out an idea, if the stock does not trade above the Buy Above price or in the case of a short the Sell Below Price you do nothing. The idea is not valid. Do NOT think that you are outsmarting anyone by jumping in early.

Q) What happens if the stock heads in the opposite direction before hitting the Buy or Sell price?
A) If the idea breaks down and hits the stop price before the entry price the idea is INVALID. DO NOT ENTER.

Q) Is there a way to earn a bigger rate of return with these swing trades?
A) Sure, because most of our swing trade ideas are listed on the NYSE and NASDAQ many of them have options. You can always pick up in the money options because if we are right they will show higher rate of return. Remember though, if we are not right this strategy carries much more risk.

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