Which Asset and Market to Trade in Swing Trading?

Swing trading is a strategy of trading that is appealing to both novice traders and more experienced traders. The biggest difference between swing trading and day trading is that swing trading is not a constant monitoring of the market. Instead, swing trading lets you play off short and medium-term motion of the market; swing trades usually last anywhere from a few days to a few weeks. But advisory questions still remain for discussion: What asset and what market do I trade in swing trading? Let's break it down.

Which Assets to Trade in Swing Trading?

As a swing trader, you do not have to limit your opportunities to just one asset class. This can vary in swing trading and that is the beauty of swing trading. You can choose from:

• Stocks

• Commodity

• Futures

• Bonds

• Currencies and Cryptocurrencies

Which Market to Trade in Swing Trading?

Swing trading works in any market that can provide for price swings. However, swing trading works best in a trending market.

Why Trending Market?

Take for instance that you have constructed a long only swing strategy, and you realized too late that you had identified a swing low. Your upper hand here is because the trend of the broader market is in an overall uptrend, you can limit your risk of a trade failing.

That is why swing traders prefer markets that have an undeniable trend - more space for failure and more probability of success!

Benefits and Drawbacks of Swing Trading

Benefits:

Less Risk in a Trend -  Trends provide a cushion for delayed entry.

Beginner-Friendly - Easy to understand and implement.

Less Daily Stress -  You have days- or weeks-long trades and don’t need to check constantly.

Time for a Life - There’s no need to be glued to your screen.

Drawbacks:

Gap Risk - News released after market hours can create overnight price gaps.

Requires Technical Knowledge - Misreading indicators can lead to poor decisions.

Limited by Volatility - Decreased opportunity profitability exists in a sideways or choppy market.

Conclusion

If you are seeking a more moderate offering of risk and reward in trading, swing trading is a great option for active traders who prefer not to trade with the full-force intensity of day trading. By selecting the appropriate assets (whether they are stocks, commodities or even cryptocurrencies), combined with tried-and-true technical trading tools (such as MACD or RSI), you can embark on a path to profitable swing trading.

Our goal is for traders to be disciplined and well researched. Diversify wisely, back-test mercilessly, and get your learning on!