Trading has two extremes
On one end is buy and hold and on the other end is day trading. Buy and hold may be preferred by some. On the other hand, many traders understand the inherent downside risk in this timeframe. They want to be a more involved participant in their financial well being yet cannot sit in front of a computer all day to day-trade. This is where Swing Trading comes in.
Here is what Howard Bandy says about hold times. “Drawdown not only increases in proportion to the square root of holding period but holding any issue that gives enough variation to be profitable (if you trade volatility) also exposes holding periods longer than a few days to drawdowns in excess of most trader’s risk tolerance.”
Based on research we know 70% of market moves occurs over only 30% of the time. The rest of the time, the markets are “digesting” the previous move. The buy and hold trader is willing to sitthrough those periods of digestion that can last months. On the other hand, the nimble Swing Trader will carefully pick spots to enter and exit trades. This trader can still take advantage of the larger moves without the excessive risks involved with buy and hold.
Swing trading enables you to allocate your money between inactivity and constant activity. It allows you to trade over several days taking advantage of current opportunities in the market without ensnaring all of your capital. And without chaining you to your computer.
We place our Swing Trades the night before each market day
All QiT trades are placed the night before each trading day. Then all you have to do from that point on is monitor them if you want. Or you can just let the market do what the market does and fill positions when the limit price is hit. This gives you flexibility and maneuverability because it allows you to trade the market regardless if you have a full-time day job or not.
Swing Trading is the art and science of profiting from securities short-term price movement spanning a few days to a few weeks. Swing traders are rarely invested 100% but wait for the perfect setup and attempt to take the lion’s share of a move.
If you’re a buy and hold investor you don’t care about price swings and you don’t short. You study, study and study some more to identify candidates you hope will appreciate over time. Whereas swing traders will take advantage of short-term price swings and are not looking for long-term appreciation.
Buy and Hold investors are concerned with wealth preservation and growth and are willing to wait a long time for their investment to grow. Swing traders are more concerned about income generation.
We’re the Plan in “Plan your Trade and Trade your Plan” – TraderJanie
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