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Important Tips and Techniques of Swing Trading

Swing trading is the practice of earning profits from the swings in prices of a stock. Contrary to the day traders, swing traders have to stay in the market and keep themselves updated with the latest trends. In terms of the period of holding a trade, swing traders lie between the trend traders and day traders.

Like any other trading style, swing trading has its own set of advantages and disadvantages. A major benefit of swing trading is that it gives numerous chances of trading due to continually fluctuating and swinging prices. Whereas, a disadvantage of swing trading is that the traders must work very hard round the clock to observe the swings and make sales accordingly.

Simple Moving Averages (SMAs)

SMAs are calculated in various types of trading to make smart and calculated decisions about selling the stocks and earn maximum profits. It provides an excellent estimate of the expected changes in price movement. SMAs are calculated by taking a frequently changing average price over a specific time period.

For instance, a 15-day SMA adds up the daily ending prices of the last 15 days and divide by 15 to evaluate the average of each day. Each calculated average is associated with the next to form a smooth line, which aids in cutting out the noise on a stock chart. Usually, SMAs of 10-day, 15-day, and 30-day time period is calculated in swing trading. SMAs with shorter lengths are susceptible to quick changes due to fluctuating price alterations.

MACD Crossover 

MACD crossover is one of the most efficient swing trading systems. It provides a straightforward and quick method of identifying the anticipated price changes in swing-trade stocks. In addition to being a simple system, MACD crossover is probably the most popular choice of swing traders as it has very reliable trading indicators.

MACD consists of two primary lines: the MACD line and the signal line. It also contains a buy and sells signal, which is generated when the two fundamental indicators cross each other. If the MACD line crosses higher than the signal line, a bullish trend can be observed upon which a swing trader should enter the buy trade.

On the opposite, if the MACD line crosses lower than the signal line, a bearish trend is expected, and hence, the swing trader should prepare for a sell trade. Usually, a swing trader waits for the two lines to cross each other again to experience a reversal in the trade price and, ultimately, exit the trade.


Compared to the other kinds of trading, like day trading and trend trading, swing trading is safe and easy, especially for new traders. In trend trading, you can gain more profits than swing trading, but the chances of suffering major losses in trend trading are also very higher than the swing trading. Similarly, managing a significant number of stocks during day trading can prove to be quite exhausting for many traders. Hence, swing trading is the perfect trading style for a majority of traders.