Option Investor
Glossary

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Swing Trade

A Swing Trade is one in which the trader anticipates holding the position for two to five days. This is done with the thought that a stock may rise in price during this period of time and then pull back to test support and/or consolidate before again moving higher. Generally, as the stock rises in price, the trader will adjust the stop loss accordingly to protect profits against a potential reversal in trend. There are several indications Swing Traders may look for when selecting a position, such as a new 52-week high backed with strong volume, a breakout, or an oversold position working to reverse course. Disciplined Swing Trading can be a very profitable way to trade.