Rather than completing a trade within a single day as in day trading, swing trading holds a position for roughly days to weeks. Technical analysis tools, such as moving averages or trendlines, are sometimes used as reference points for decisions.
Features
This approach does not require monitoring price movement as constantly as day trading, but it still calls for trading decisions on a shorter cycle than long-term investing.
Benefits and points to keep in mind
Because a position is carried over to the next day or beyond, there is a risk that news outside of trading hours — such as an earnings announcement or overseas market moves — could cause an unexpected price swing. It is considered important to think through a stop-loss threshold in advance as a form of risk management. Compared with other investment styles such as day trading or long-term investing, neither approach is inherently superior — each has its own characteristics and points to keep in mind.