- Swing trading stocks and commodities works with the medium-term swings of the stock market during a bull or bear economy. A trader will create a portfolio that blends day trading and long-term investments to secure the best possible return on his money. A swing trader holds stocks for as little as a few hours to a month. Swing trading is best used during periods of minor volatility rather than major market shifts.
- A swing trader utilizes information that flows through the market to make decisions about which stocks and commodities are the best investment. During periods of no clear movement in the market, a swing trader can identify the small fluctuations of the listings within a particular index, even when that index stays flat. While investors with large swaths of stocks and bonds, such as mutual funds, lose money during a particular period, a swing investor will have changed stocks multiple times and made a profit.
- Recessions happen periodically within the marketplace. Economists and market observers are paid to predict the outcomes of certain situations through research about future returns and previous market performances. When a period of low movement is predicted, a swing trader can turn these recessions into ideal situations for investment. Even when the majority of the stock market is under-performing, a swing trader can identify those investments with the largest return, making the practice a valuable one during recessions.
- Trading frequently creates an atmosphere in which one does not make large sums of money from one or two trades, but small returns on short- to medium-term investments. Because the fluctuations within the market can be frequent and unpredictable, a swing trader may suffer the consequences of poor decisions. However, an experienced swing trader can hedge against these losses in profit by making many trades and investments and keeping the stocks and commodities changing. Ideally, a swing trader will hold onto a stock only for the period of time in which the security has the best return.
- Although swing trading has been around since the early part of the 1900s, the terminology and practice became highly popular during the first decade of the 21st century. After the economic collapse of 2008, swing trading was the subject of many books and television programs from economists and market observers. The author who is most recognized in starting the phenomena of swing trading is Martin Pring with his book "The Definitive Guide to Swing Trading Stocks and Commodities." The book won many awards and became a financial bestseller during the recessionary period.
