If there is one thing the stock market does almost like clockwork, it is swing. Not only do the prices of different stocks in the market keep fluctuating, but so do the corresponding fortunes of the holders of different positions on said securities. Whilst intra-day trading is a commonly used approach to use the swing of the stock market to trade stocks within a day, some traders tend to prefer swing trades.
Published on 15 March 2023
OPEN A FREE* DEMAT AND TRADING ACCOUNT
IN 15 MINS*
What is Swing Trading?
Swing trading is an approach to trading in stocks that encompasses holding positions for longer than a day to use the short to medium term rise in a stock's price to one's advantage. Swing trades may last anywhere between a few days to a few months and are adopted to benefit from an anticipated upward swing in a stock's price.
How Swing Trades Work
Swing traders generally use a combination of technical analysis and their own risk-reward assessment to determine which stocks to choose and when. If you are thinking of entering into a swing trade for a particular stock, it is advisable to engage in a thorough analysis of the price and volume markers of said stock over the past few months and determine your risk-reward matrix.
For instance, if you purchase a stock at a price of ₹79 in a swing trade, anticipating it to grow to ₹84 in the next month, your potential gain is ₹5 per stock. However, you should also determine a stop loss to safely exit the trade with a loss that you are ready to bear. If the price of the aforementioned stock keeps falling and reaches, say ₹77, you may want to get out of the trade. A significant aspect of swing trades is the risk you are ready to bear for an anticipated gain. Also Read: 3 Important Exit Strategies for Day Traders
Swing Trades - Pros and Cons!
Here are some of the advantages and disadvantages of swing trades.
Pros of Swing Trades
Cons of Swing Trades
Swing trades need lesser time than day trades;
There is an enhanced risk of overnight price drops and losses owing to stock positions held beyond a day;
They can help you capture the short to intermediate gains in a stock's price;
If a stock's performance is not in alignment with the expectation for a swing trade, there can be significant losses;
They can be entered into based on technical analysis of a stock's performance.
Long-term market opportunities tend to be ignored in favour of short to medium-term ones.
Markers to Look for in Swing Trade Stocks
If you are looking for the best swing trade stocks, here are a few markers that can help you identify them.
The Liquidity of a Stock: One of the markers of optimal swing trade stocks is their liquidity. The liquidity of a stock reflects its trade volume in the market. Therefore, the higher a stock's liquidity, the higher its demand and potential growth. Swing traders in India tend to opt for stocks with a high degree of liquidity to enter swing trades. A highly liquid stock is also less risky than one with low liquidity.
How a Stock is Performing: While picking a stock for a swing trade, you should look for stocks whose performance is consistently exceeding the overall performance of the index, sectoral and wider stock market indices alike. This way, you can select high-performing stocks that are leaders in their respective sectors in terms of their trading performance. Also Read: 5 Rules for selecting stock for Intraday Trading
The Volatility of a Stock: It may be tempting to invest in a stock that has turned heads overnight with a sudden spike in its price. However, high volatility goes both ways, and the sooner such stocks rise to the zenith of the market, the sooner they can fall back down as well. Therefore, it is advisable to opt for swing trade stocks that are relatively stable and exhibit low to moderate volatility.
In Conclusion
Swing Trading is a highly effective stock market trading strategy, albeit one that requires clarity on your risk-reward appetite, careful selection of stocks, thorough analysis, and a regular watch on the market. While selecting stocks to swing, you should consider various important factors, including liquidity, performance, and volatility.
Team Espresso
We care that you succeed
Bringing readers the latest happenings from the world of Trading and Investments specifically and Finance in general.
Day trading, also known as intraday trading, is the process of buying and selling securities in the stock market on the same day through a margin account. The objective of day trading online is to lock in profits from the movement of stock prices.
Since the SEBI has mandated all transactions in the stock market to go through a stockbroker, as an investor, the brokerage is an unavoidable cost. The markets are highly volatile and competitive, rendering profit-making a difficult task. Add to it brokerage and other costs associated with trading, and you have a higher mountain to climb.
The stock market is a complex ecosystem. It offers a few asset classes that investors can browse and utilize their idle finances in stock trading to earn profits. All significant trading exchanges have the option of margin trading. It provides investors with additional capital.
A Repetitive Trading Pattern for a stock means the recurrence of similar movement patterns in the price of a particular stock over a given period. Stocks with a highly repetitive trading pattern are considered stable and ideal for swing trades. The more repetitive this pattern is, the more reliable a stock is.
From March 1, 2021, the margin required to enter into a swing trade in the Indian stock markets has been increased to 50 per cent by the Securities and Exchange Board of India (SEBI). This margin was 25 per cent before the change, and the rise has affected trade volumes.
Direction Bias in swing trades refers to the tendency of swing traders to use the anticipated direction of a stock's price movement as their guide to select stocks for swing trades. For instance, if a swing trader expects the price of a stock to go up over a given period, they will enter into a swing trade accordingly based on that direction bias.
Related Articles
What is Day Trading Margin?
Day trading, also known as intraday trading, is the process of buying and selling securities in the stock market on the same day through a margin account. The objective of day trading online is to lock in profits from the movement of stock prices.
Since the SEBI has mandated all transactions in the stock market to go through a stockbroker, as an investor, the brokerage is an unavoidable cost. The markets are highly volatile and competitive, rendering profit-making a difficult task. Add to it brokerage and other costs associated with trading, and you have a higher mountain to climb.
The stock market is a complex ecosystem. It offers a few asset classes that investors can browse and utilize their idle finances in stock trading to earn profits. All significant trading exchanges have the option of margin trading. It provides investors with additional capital.
A Repetitive Trading Pattern for a stock means the recurrence of similar movement patterns in the price of a particular stock over a given period. Stocks with a highly repetitive trading pattern are considered stable and ideal for swing trades. The more repetitive this pattern is, the more reliable a stock is.
From March 1, 2021, the margin required to enter into a swing trade in the Indian stock markets has been increased to 50 per cent by the Securities and Exchange Board of India (SEBI). This margin was 25 per cent before the change, and the rise has affected trade volumes.
Direction Bias in swing trades refers to the tendency of swing traders to use the anticipated direction of a stock's price movement as their guide to select stocks for swing trades. For instance, if a swing trader expects the price of a stock to go up over a given period, they will enter into a swing trade accordingly based on that direction bias.
Sharekhan Comtrade Private Limited (TM) operates the web site accessible from the URL www.myespresso.com (the “web site”').
Sharekhan Comtrade Private Limited is committed to protecting your privacy and utilising technology that gives you the most powerful, safe, online experience that you can get anywhere else.
Sharekhan Comtrade Private Limited does, however, gather certain information that is provided by you to the Web Site. Sharekhan Comtrade Private Limited believes that by collecting this information Sharekhan Comtrade Private Limited is able to provide you with a personalised web experience, and to assist its own sales team and advertisers in efficiently reaching an appropriate audience.Sharekhan Comtrade Private Limited does, however, gather certain information that is provided by you to the Web Site. Sharekhan Comtrade Private Limited believes that by collecting this information Sharekhan Comtrade Private Limited is able to provide you with a personalised web experience, and to assist its own sales team and advertisers in efficiently reaching an appropriate audience.
Sharekhan Comtrade Private Limited requests the minimum information it believes necessary to achieve this goal.
The following discloses Sharekhan Comtrade Private Limited's information gathering and dissemination practices for the Web Site:
System Data:
Sharekhan Comtrade Private Limited uses your IP address to help diagnose problems with our server and to administer the web site. Your IP address is used to identify you and your shopping cart and to gather broad demographic information.
Registration Data:
The Web Site's registration form may require users to give us contact information (like their name, phone number and e-mail address), unique identifiers (like their PAN Number) and demographic information (like their pin code, age or income level). The Web Site uses customer contact information from the registration form to send the users information about Sharekhan Comtrade Private Limited and promotional material from some of Sharekhan Comtrade Private Limited's partners. The customer's contact information is also used to contact the visitor when necessary. Unique identifiers (such as PAN numbers) are collected to verify the user's identity. Demographic and profile data is also collected at the Web Site. We use this data to tailor the visitor's experience at the Web Site, showing them contents that we think they might be interested in, and displaying the contents according to their preferences. This information is shared with advertisers on an aggregate basis.
Links and Co-Branded Sites:
This site contains links to other Web Sites which are not necessarily been screened or reviewed by www.myespresso.com. Sharekhan Comtrade Private Limited is neither responsible for the privacy practices or the contents of such Web Sites nor shall be held answerable for the inaccurate, inappropriate or offensive data, material, information, products and services that may be viewed on those sites.
Sharekhan Comtrade Private Limited may operate a number of co-branded sites. Policies regarding information collection and sharing may differ on some of these co-branded sites. If you have any particular questions, you should check the privacy statement that appears on each co-branded site.
Order Forms:
The Web Site uses an order form for customers to request information, products and services. The Web Site collects visitors' contact information (like their mobile number or e-mail address), unique identifiers (like their PAN number) financial information (like their account or credit card numbers) and demographic information (like their pin code, age or income level). Contact information from the order form is used to send orders, information about Sharekhan Comtrade Private Limited, and promotional material from some of Sharekhan Comtrade Private Limited's partners to the visitors of the Web Site. The visitor's contact information is also used to get in touch with the visitor when necessary. Financial information that is collected is used to check the users' qualifications and bill the user for products and services. Unique identifiers (such as PAN numbers) are collected from Web Site visitors to verify the user's identity.
Surveys and Contests:
The Web Site's online surveys ask visitors for contact information (like their mobile number or e-mail address) and demographic information (like their pin code, gender, age or income level). The Web Site uses contact data from its surveys to send the user information about Sharekhan Comtrade Private Limited and promotional material from some of Sharekhan Ltd.'s partners. The customer's contact information is also used to contact the visitor when necessary. Users may opt-out of receiving future mailings; see the choice/opt-out section below. Demographic and profile data is also collected at the Web Site. The Web Site use this data to tailor its visitor's experience at the Web Site, showing them content that it thinks they might be interested in, and displaying the content according to their preferences. This information is shared with advertisers on an aggregate basis.
Sharekhan Comtrade Private Ltd run contests on the Web Site in which we ask visitors for contact information (like their e-mail address). Sharekhan Comtrade Private Limited uses contact data from its contests to send users information about Sharekhan Comtrade Private Ltd. and promotional material from some of our partners. The customer's contact information is also used to contact the visitor when necessary. Users may opt-out of receiving future mailings; see the choice/opt-out section below.
Third-Party Advertisement Servers:
Sharekhan Comtrade Private Limited engages the services of an outside advertisement company to display advertisement on the Web Site. These advertisements may contain cookies. While Sharekhan Comtrade Private Limited uses cookies in other parts of the Web Site, cookies received with banner advertisements are collected by the Advertisement company, and Sharekhan Comtrade Private Limited does not have access to this information.
Protection of your Data and Information:
The privacy and protection of your data and information provided to us is of vital importance. Sharekhan Comtrade Private Limited shall ensure to safeguard the security and confidentiality of any information you share with us. Any personally identifiable information of the customers obtained by us shall not be used or shared other than for the purposes to which the customers consents. However security and confidentiality of information cannot be guaranteed cent percent. Hence despite our utmost efforts to protect your personal information, Sharekhan Comtrade Private Limited and www.myespresso.com cannot warrant the security of any information you transmit to us through our online services. Such transmission of your personal information is done at your own risk.
Disclosure of Customer Information :
Sharekhan Comtrade Private Limited and www.myespresso.com shall not deliberately disclose customer's personally identifiable information to any unauthorized third person, save and except where such information shall be disclosed in good faith and for the purpose of law for the time being in force or to protect the rights and property of Sharekhan Comtrade Private Limited and www.myespresso.com.
Public Forums :
The Web Sites makes chat rooms, forums, message boards and/or news groups available to its users. Please remember that any information that is disclosed in these areas becomes public information and you should exercise caution when deciding to disclose your personal information.
Supplemental Information :
The Web Site supplements the information that you provide with information that is received from third parties.
The Web Site DOES NOT entice by the prospect of a special game, prize or other activity, to divulge more information than is needed to participate in the activity.
Further to the above, in light of the recently notified Information Technology (Reasonable security practices and procedures and sensitive personal data or information) Rules, 2011. (Hereinafter referred to as the Rules)
The following shall be deemed to be sensitive information :
Password;
Financial information such as Bank account or credit card or debit card or other payment instrument details;
Physical, physiological and mental health condition;
Sexual orientation;
Medical records and history;
Biometric information;
Any detail relating to the above clauses as provided to body corporate for providing service; and
Any of the information received under above clauses by body corporate for processing, stored or processed under lawful contract or otherwise:
provided that, any information that is freely available or accessible in public domain or furnished under the Right to Information Act, 2005 or any other law for the time being in force shall not be regarded as sensitive personal data or information for the purposes of Rules.
Collection of Information:
Compliance with KYC guidelines as per SEBI / Exchanges / Or any other Act, law or regulation requiring the same and any internal KYC guidelines formulated by Sharekhan Comtrade Private Limited.
In order to provide enhanced trading experience to the client.
In order to provide any further information to be provided to regulators.
Such information may be collected in a manner that the client is always aware of the collection and purported usage of the same. The client shall have an option to withdraw consent to share the information. However such intimation shall be required in writing. Such intimation shall only be taken into account from the date on which the same is received. Sharekhan Comtrade Private Limited may choose to stop services to such a client in case such intimation is received. Such information shall only be used for the purpose it is collected.
Clients would be allowed an option not to disclose any information to be collected, provided the same is in compliance with regulatory requirements.
Disclosure of information:
Disclosure of sensitive information would be as per the terms agreed by the clients. For any change in such terms, the clients would be informed.
Provided no consent may be required in case the same is being shared as per compliance guidelines or as required by regulators.
Any information being disclosed to third parties would be in accordance with the Rules and would be done provided such third party has the same level of compliance guidelines as Sharekhan Comtrade Private Limited.
Sharekhan Comtrade Private Limited shall allow clients to review their personal information and the same shall be allowed to be edited provided exchange guidelines relevant to the same are followed.
Sharekhan Comtrade Private Limited shall maintain reasonable security practices and procedures and maintain a comprehensive documented information security programme. In the event of an information security breach, Sharekhan Comtrade Private Limited or a person on its behalf shall be required to demonstrate as and when called upon to do so by the agency mandated under the law, that there have implemented security control measures as per their documented information security programme and information security policies and information security policies that contain managerial, technical, operational and physical security control measures that are commensurate with the information assets being protected with the nature of business.
KYC Languages
Download Client Registration Documents (Rights & Obligations, Risk Disclosure Document, Do's & Don't's) in Vernacular Language :
Note: "This document is a translated version of the client registration documents in English and is being provided in vernacular language to facilitate better understanding by the investors. In case of any ambiguity, the contents of the English version would prevail."
NDNCR Terms & Conditions
By accepting the Terms & Conditions, you authorise Espresso, its representatives and agents to provide information about various products, offers and services provided by Espresso through any mode, including telephone calls, SMSes, emails, letters and any other mode of communication. You also confirm that laws in relation to unsolicited communication referred in "National Do Not Call Registry" as laid down by "Telecom Regulatory Authority of India" will not be applicable for such information/communication.
Filing Complaints on SEBI Complaint Redress System (SCORES) - Easy and Quick
Register on the SCORES portal
Mandatory details for filing complaints on SCORES:
Name
PAN
Address
Mobile Number
Email ID
Benefits:
Effective communication
Speedy redressal of grievances
You can file complaints on SCORES through https://scores.gov.in/scores/Welcome.html
