What is Swing Trading ?

• Swing Trading takes advantage of brief price swings in strongly trending stocks to ride the momentum in the direction of the trend.
• Swing trading combines the best of two worlds — the slower pace of investing and the increased potential gains of day trading.
• Swing traders hold stocks for days or weeks playing the general upward or downward trends.
• Swing Trading is not high-speed day trading. Some people call it momentum investing, because you only hold positions that are making major moves.
• By rolling your money over rapidly through short term gains you can quickly build up your equity.
• Q.How does Swing Trading work?
• A.The basic strategy of Swing Trading is to jump into a strongly trending stock after its period of consolidation or correction is complete.
• Strongly trending stocks often make a quick move after completing its correction which one can profit from.
• One then sells the stock after 2 to 7 days for a 5-25% move. This process can be repeated over and over again. One can also play the short side by shorting stocks that fall through support levels.
• In brief a Swing Trader’s goal is to make money by capturing the quick moves that stocks make in their life span, and at the same time controlling their risk by proper money management techniques.

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It is imperative for the investors to follow the Dos and Don’t in general while dealing in the stock market. As there are attendant risks associated with it.

Given below are the Dos and Don’ts in general for investors who are dealing in Stock markets.

Do's

• Always deal with the market intermediaries registered with SEBI / Exchanges.
• Give clear and unambiguous instructions to your broker / agent / depository participant.
• Always insist on contract notes from your Broker. In case of doubt of the transactions, verify the genuineness of the same on the Exchange website.
• Always settle the dues through the normal banking channels with the market intermediaries.
• Before placing an order with the market intermediaries please check about the credentials of the companies, its management, its fundamentals and recent announcements made by them and various other disclosures made under various Regulations. The sources of information are the websites of Exchanges and companies, databases of data vendor, business magazines etc.
• Adopt trading / investment strategies commensurate with your Risk bearing capacity as all investments carry risk, the degree of which varies according to the investment strategy adopted.
• Please carry out due-diligence before registering as client with any Intermediary. Further, the investors are requested to carefully read and understand the contents stated in the Risk Disclosure Document, which forms part of investor registration requirement for dealing through brokers in Stock Market.
• Be cautious about stocks, which show a sudden spurt in price or trading activity, especially low price stocks.
• Please be informed that there are no guaranteed returns on investment in stock markets.

Don’ts

• Don’t deal with unregistered brokers / sub-brokers, intermediaries.
• Don’t deal based on rumours .
• Don’t fall prey to promises of guaranteed returns.
• Don’t get misled by companies showing approvals / registrations from Government agencies as the approvals could be for certain other purposes and not for the securities you are buying.
• Don’t leave the custody of your Demat Transaction slip book in the hands of any Intermediary.
• Don’t get carried away with onslaught of advertisements about the financial performance of Companies in print and electronic media.
• Don’t blindly follow media reports on corporate developments, as they could be misleading.
• Don’t blindly imitate investment decisions of others who may have profited from their investment decisions.