R EVIEWING D IFFERENT T YPES OF

T RADERS
1. Scalping The scalper is an individual who makes dozens or hundreds of
trades per day, trying to scalp a small profit from each trade by exploiting
the bid-ask spread
2. Momentum Trading Momentum traders look to find stocks that are moving
significantly in one direction on high volume and try to jump on board to ride
the momentum train to a desired profit
3. Technical Trading Technical traders are obsessed with charts and graphs,
watching lines on stock or index graphs for signs of convergence or
divergence that might indicate buy or sell signals
4. Fundamental Trading Fundamentalists trade companies based on
fundamental analysis, which examines things like corporate events such as
actual or anticipated earnings reports, stock splits, reorganizations or
acquisitions
5. Swing Trading Swing traders are really fundamental traders who hold their
positions longer than a single day. Most fundamentalists are actually swing
traders since changes in corporate fundamentals generally require several
days or even weeks to produce a price movement sufficient enough for the
trader to claim a reasonable profit1

S WING T RADING D EFINITION

A style of trading that attempts to capture gains in a stock within one to four
days.
Swing traders use technical analysis to look for stocks with short-term price
momentum.
These traders arent interested in the fundamental or intrinsic value of stocks,
but rather in their price trends and patterns.2
In reality, swing trading sits in the middle of the continuum between day
trading to trend trading:
o A day trader will hold a stock anywhere from a few seconds to a few hours
but never more than a day.
o A trend trader examines the long-term fundamental trends of a stock or
index, and may hold the stock for a few weeks or moths.
Swing traders hold a particular stock for a period of time, generally a few days
or two o r three weeks, which is between those extremes, and they will trade
the stock on the basis f its inter-week or intra-month oscillations between
optimism and pessimism.3

1
http://www.investopedia.com/articles/trading/02/
100102.asp

2
http://www.investopedia.com/terms/s/swingtradin
g.asp

B REAKING D OWN S WING T RADING

To find situations in which a stock has the extraordinary potential to move in

such a short time frame, the trader must act quickly.
Therefore, swing trading is mainly used by at-home and day traders.
Large institutions trade in sizes too big to move in and out of stocks quickly.
The individual trader is able to exploit such short-term stock movements
without having to compete with the major traders.4

T HE R IGHT S TOCK

The first key to successful swing trading is picking the right stocks.
The best candidates are large-cap stocks that are among the most actively
traded stocks on the major exchanges.
In an active market, these stocks will swing between broadly defined high and
low extremes, and the swing trader will ride the wave in one direction for a
couple of days or weeks only to switch to the opposite side of the trade when
the stock reverses direction.

3
http://www.investopedia.com/articles/trading/02/
101602.asp?rp=i

4
http://www.investopedia.com/terms/s/swingtradin
g.asp