SHARETIPSINFO >> Articles Directory >>Swing Trading Education, Be an expert in Indian stock market


There are different ways of stock trading. Different investors choose different stock trading techniques according to their objective of stock market investment. Some of them prefer the day trading where the positions are closed within a day. Some investors invest in the market for long periods that might be extended even to a few years. Swing trading falls in between these two types of trading. The time frame in the swing trading is not as short as the day trading and not as long as the long term trading. The objective of swing trading is to get short term benefits from the long term trend of the stocks. Swing traders target those stocks that are up market and most likely to appreciate in the near future. While selecting the stocks for swing trading, the traders speculate on the long term trend of the stocks. This is one particular trading style where the long term trend of the stock is used for making the short term trading.

Like any other stock trading techniques as a swing trader as well, you have to make sure that you choose the right stocks and follow a strategy that will minimize your risk. The most important aspect of swing trading is to identify the up market stocks. Generally the up market high priced stocks rise higher and the low priced up market stocks rise in the price as well. As a swing trader you have to keep a close watch on the pattern of the price movement of the stock and determine flawlessly when the stock will stop falling any further and swing to up ward trend. This is the most critical and significant part of swing trading. If you want to get success in swing trading you have to master this art of identifying the right time for investing in the stock. The best way to predict the price movement of the stocks is to carefully follow the results of the technical analysis of the stocks. In technical analysis the graphical pattern of the price movement of the stock is compared with the previous price pattern to predict the future movement of that particular stock.

The simplest formula for identifying the stocks that are seeing an up trend is, first select the stocks that are trading at a price that is not too high or low and the trading volume is also quite fair. Then take the 10 day moving average and the 20 day simple moving average of the stock. Now you have to look for the closing price of the stock and if it is higher than the 10 day average and the 10 day average is over the 20 day moving average then the stock can be said to be in an upward trend. Once you have all these parameters you can determine easily if the stock is in an up ward trend or not. If you are sure that the stock is on up ward trend you can seek the result of the technical analysis and that will tell you when to invest in that stock for a profitable swing trade.

After selecting the stock for swing trading and getting the right level for making the investment, you should not invest your entire fund at one go. You can invest about 40% of the fund you have for swing trading and then wait to see the movement of the stock. If the stock starts to move upward or shows the signs of upward movement, you can of course invest rest of the fund to that stock. This is ensure that if anything goes wrong in that investment, you will have enough fund to recover the losses.

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