A swing trader holds about the same amount of stock as he would a non-swing trader. Most traders hold on the order book until the trade, which allows them to buy and sell stocks of various types with as little as one hour of trading. After that the trader can buy and sell stocks at any time during the day or in the morning, on-the-clock.
A key component of a swing trader’s trading strategies is the ability to change the way he or she trades and the size of the order book. Most times, traders start out with a few orders, which they buy and sell as needed. A swing trader can grow larger or smaller orders at will, as long as each order is equal in size to the smallest one the average trader has traded. Once the trades begin to take shape the trader may choose to increase or decreases the size of his or her order book as needed.
Stocks that have not gained much traction in today’s markets – such as companies which have not been profitable for longer than ten years – tend to be less well traded than stocks which have enjoyed more recent profit-driven spikes. Stock prices of such companies also tend to rise and fall more than those of comparable firms who are profitable and likely to earn increased capital.
The reason stock prices tend to rise and fall more than the S&P 500 Index is that traders are often willing to pay significantly premium to purchase a stock when it has not gained much momentum in the last few months. This is because many companies are in the process of making significant cost concessions and, hence, many of these new owners may have more incentive to maintain their holdings over time.
What are the advantages of an on-line trading platform?
Most swing traders use internet-based exchanges such as Yahoo Finance and Fandango.
The advantage of a internet-based exchange is that your trades are posted to the central server which allows the exchange to identify you through your username and password that they will display in the interface. This is unlike the days when you had to use human brokers which required a lot of information and often required you to make two large wire transfers to the exchange.
One downside of this system is that not all online banks and brokerages comply with US financial regulations and thus, it is possible for online traders to lose their accounts if their accounts become suspicious or fail to meet certain standards. Thus, it may not be possible to trade with the same account if one of you goes offline for business reasons
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