What Is Swing Trading?

• Swing trading is trading based on maintaining an operation for a period greater than 1 day, but not more than a few weeks.
• Swing trading strategies are usually based on technical input or macroeconomic issues.

 How do swing traders make decisions ?

Technical analysis is very important when creating strategies for swing trading, because being able to identify the end of a corrective move and being able to operate in the direction of the prevailing trend can increase the likelihood of a successful operation. In conclusion, technical analysis will help swing traders identify clear entry levels based on price and chart.

Additionally, many swing traders base their strategies on macroeconomic events. This means, for example, that if a war breaks out in an oil-producing country, this increases the chances that the price of oil will increase. In this scenario, a trader may go long on oil anticipating that this event may affect market prices for the next two weeks. Identifying events helps a lot in trading, because many events that occur around us mark the sentiment of different financial markets.

Can I trade against the trend?

Some swing traders tend to trade against the trend, but does this mean that their chance of making a profit is necessarily lower? Not always, because an important part of swing trading is multi-term analysis. This means that a trader not only analyses one time interval on the chart, but makes their decisions based on multiple time intervals.

As an example, let's assume that the daily interval indicates an increasing trend. On the other hand, the hourly and fifteen-minute intervals may indicate that in the short or medium term a decrease may occur. In this case, the trader knows that even though the long-term trend is bullish, they can still make potential gains in the short or medium term by taking advantage of signals generated by shorter time intervals.