Swing Trading

Swing trading is a style of trading that attempts to capture gains within few days.

If one can time swing trading the potential for gains can be enormous. Imagine the Dow moving 2,000 points in two years. To accomplish the 2,000 point move the Dow swung back and forth many times. While reaching a 2,000 point gain it actually traveled 20,000 points going back and forth. If some of these swings can be captured with accurate trading, the profit potential for the same two year time period can be many thousands of points instead of just 2,000. That is the power of swing trading.

The other advantage of swing trading is the compounding of the profit. In business, what earns profits is turning over of the inventory. Think of your equity as inventory. In that respect, your goal is to maximize profit per dollar per day. In essence, if you try to make a small percentage on your equity each day, but compound that amount as rapidly as possible, the profits will grow faster. Most people focus on buying a stock at $30 and selling it at $60, and they rarely care how long it takes them to do that. However, if during that time if you can buy ten $30 stocks and sell them each at a 10% gain and compound, you will be way ahead.

Swing trading allows for greater earnings and faster compounding of the profits.

Large institutions trade in sizes too big to move in and out of stocks quickly. Whereas, the individual trader is able to exploit the short-term price movements by getting in and out quickly; therefore, taking advantage of the price swings.

Dow Indicator's strategy of analyzing the 30 underlying stocks to determine the short-term directions of the markets takes full advantage of the power of swing trading.