Swing traders, Financial Management

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Swing Traders

Swing trading is more or less similar to day trading except that swing traders will normally have a longer holding period during a working day. Swing traders also attempt to predict and trade a stock based on a particular trend it is following from past trading days. But unlike day traders they will hold stocks for more than one day, if necessary, to give the stock price some time to move.

Although swing traders have the opportunity to earn higher returns than day traders, primarily due to the extended hours they work on trading, they also have greater risks. Where day traders liquidate their stock at the end of the day, swing traders take on overnight risk. Although the term, ‘overnight risk' doesn't sound too scary, many of the overnight risks assumed by swing traders are quite substantial. For example, developing news events and earnings warnings that are not announced until trading hours could have huge impact on the opening prices of stocks on the next trading day.


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