Swing trading is when bonds, stocks, commodities, and more are repeatedly bought or
sold at high or low peaks of the market. This trading method is usually practiced longer than a day, but shorter than what is required for trend following (2.3.2). Swing trading has a set of rules that help eliminate emotional biases, subjectivity, and labor intensive analysis. These rules can be used to predict market patterns by using trading algorithms. A simple method of swing trading involves the evaluation of three moving averages of closing prices. If the three averages are aligned in an upward direction, it is traded long term. If the three averages are aligned downward, it is traded short term. The hardest thing for a swing trader is deciding when to buy
or sell. It is a good thing that swing traders don’t need to be precise in their timing to buy or sell in order to be profitable. As long as there’s a little consistent earnings mixed with money management, the outcome can be significant. The biggest risk is not every algorithm will work every time.