Tuesday, October 4, 2005

What is swing trading

According to Philip Gotthelf, who has a very well written article about daytrading in the current issue of SFO, swing trading "involves identifying swing points that usually are based on a momentum-exhaustion theory". He outlines a stock movement containing five phases: ignition, acceleration, deceleration, consolidation, and reversing.

For me, I see consolidation, acceleration, consolidation again, and reversing. Regardless the number of phases, as a swing trader, all I need to do is to identify the consolidation (the longer, the better), to jump on the board when it is about to accelerate to the upside, to jump off the train when it is about to consolidate its recent gain.

I am a swing trader. Are you? If you want to become a trader, you have to find out what type of trader you are or you want to be. The sooner, the better. There is no good or bad. Just find one that fits your personality best. Like music, some people love classical, some people prefer heavy metal; one is not superior than the other.

Me? Intraday trading requires me to be attached to the monitor for too long; long term investing needs me to study too much fundamental information that I can't find any truth within the data. So I stick to my favorite: swing trading.

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