Swing trading is a style of buying or selling financial securities where you hold your positions for the next day and up to a week time or more.Main motive of a swing trade is to acquire short term gains from price change of financial securities.
Swing trading is highly profitable if combined with good risk management.Beginners traders only focus on possible returns that a swing trade can generate.What they should focus is how much potential risk a particular swing trade have and try to minimize it by a counter position or use any other way of reducing risk.
Overnight gap risk in swing trading
When you buy or sell a financial security like stock or futures and hold it for more than one day,there is a chance of price gap opening the next day.If prices gap in the same direction of your trade,you will make profits.But if it gaps on the opposite direction of your trade,you will be in loss.What you can do is enter trades in financial securities with less chances of trading gaps.Gaps are created due to overnight orders in market because of some upcoming news or events.For example,its better to avoid stocks which is about to announce its earnings.
An example of swing trading
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Do you know how to trade in zones?? You can identify buying and selling zones for stocks or any other trading instrument and time your entry like professionals.
Trade with Renko charts if you want to filter all unwanted noise inside regular charts.But you need to understand and learn how Renko charts are plotted.
Don’t want to hold any overnight positions ? Day trading is the best style to adapt.Learn the right way of making consistent profits through day trading.
Learn how to swing trade like professional traders.Understand various risk involved in swing trading like gap risk and the best way to reduce your risk.
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