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Learnings the basics of swing trading

TradingPub Admin | May 14, 2013

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If you are interested in some free online trading education that you can use to achieve your investment objectives, one good place to start is learning about how to make money with swing trades.

Swing trading basics
The basic idea with this technique is to generate some quick profits as a result of holding stocks for a short period that can range between a couple of days to a few months, depending on the existing situation, according to Stock Trading To Go.

When using this strategy, traders seek to make the most of the existing trend that a stock is experiencing, the media outlet reports. The idea is simply to buy when an equity is on its way up, or sell when the security is falling value.

Investors who want to use this strategy should be sure to go with the flow once they identify a trend, as trading against one is not a good idea, according to StockProfessors.com.

Spotting a trend
One crucial aspect of swing trading is identifying strong trends when they happen, the media outlet reports. There are several ways you can do this, but there is a short list of techniques that are widespread in their use.

Pivot point trend
One way you can identify trends is by picking out pivot points. In technical analysis, these are crucial points that are harnessed by chartists to figure out key variables such as resistance, support and directional movement, according to StockCharts.com. Pivot Points are predictive indicators, and can be used to determine future support and resistance points using the closing value of the previous day, as well as the last session's high and low.

Trend Indicators
Harnessing indicators in order to spot and utilize trends is a widely-used method, StockProfessors.com says. If you want to figure out what the price trend is for a stock, two ways you can do this are by using the Relative Strength Index and also moving averages.

Moving averages examine the price movements of a security over a period, for example 50 days. Once the mean price is determined for the time frame, it can be compared against the current price of the security in an effort to figure out if the asset has started a new price trend.

Price action trend
If you would prefer to avoid using the aforementioned methods, you can utilize price action, which frequently involves using charts to visualize the movements of an asset, the media outlet reports.

Wait for opportunity
Once you have figured out a price level that you feel is right, you can place your trade. However, it is often wise to wait after you have picked out a trend, as the security might experience some sort of pullback, according to the news source.

Once you have entered your positions, you should be patient and wait, instead of giving in to the desire to constantly scrutinize the price movements of your assets, Stock Trading To Go reports. If you check your securities too frequently, you could end up make transactions too frequently and missing out on the benefit of a rally.

If you want more free online trading education, you can find it at TradingPub, home to some of the top investors and traders in the industry.