You’re our first priority.
Every time.

NerdWallet, Inc. is an independent publisher and comparison service, not an investment advisor. Its articles, interactive tools and other content are provided to you for free, as self-help tools and for informational purposes only. They are not intended to provide investment advice. NerdWallet does not and cannot guarantee the accuracy or applicability of any information in regard to your individual circumstances. Examples are hypothetical, and we encourage you to seek personalized advice from qualified professionals regarding specific investment issues. Our estimates are based on past market performance, and past performance is not a guarantee of future performance.

We believe everyone should be able to make financial decisions with confidence. And while our site doesn’t feature every company or financial product available on the market, we’re proud that the guidance we offer, the information we provide and the tools we create are objective, independent, straightforward — and free.

So how do we make money? Our partners compensate us. This may influence which products we review and write about (and where those products appear on the site), but it in no way affects our recommendations or advice, which are grounded in thousands of hours of research. Our partners cannot pay us to guarantee favorable reviews of their products or services. Here is a list of our partners.

What Is Swing Trading and How Does It Work?

Swing trading sits between day trading and long-term investing.

Many, or all, of the products featured on this page are from our advertising partners who compensate us when you take certain actions on our website or click to take an action on their website. However, this does not influence our evaluations. Our opinions are our own. Here is a list of our partners and here's how we make money.

The investing information provided on this page is for educational purposes only. NerdWallet, Inc. does not offer advisory or brokerage services, nor does it recommend or advise investors to buy or sell particular stocks, securities or other investments.

How is this page expert verified?

NerdWallet's content is fact-checked for accuracy, timeliness and relevance. It undergoes a thorough review process involving writers and editors to ensure the information is as clear and complete as possible.

Sam Taube

Lead Writer

---

9 years of experience

Expertise

• Stocks
• ETFs
• economic news

Sam Taube writes about investing for NerdWallet. He has covered investing and financial news since earning his economics degree from the University of Maryland in 2016. Sam has previously written for Investopedia, Benzinga, Seeking Alpha, Wealth Daily and Investment U, and has worked as an editor for Investment U, Wealth Daily and Haven Investment Letter. He is based in Brooklyn, New York.

Published in

Lead Writer

Sam Taube writes about investing for NerdWallet. He has covered investing and financial news since earning his economics degree from the University of Maryland in 2016. Sam has previously written for Investopedia, Benzinga, Seeking Alpha, Wealth Daily and Investment U, and has worked as an editor for Investment U, Wealth Daily and Haven Investment Letter. He is based in Brooklyn, New York.

Arielle O'Shea

Head of Content, Investing & Taxes

---

19 years of experience

Expertise

• Retirement planning
• investment management
• investment accounts

Arielle O’Shea leads the investing and taxes team at NerdWallet. She has covered personal finance and investing for nearly 20 years, and was a senior writer and spokesperson at NerdWallet before becoming an editor. Previously, she was a researcher and reporter for leading personal finance journalist and author Jean Chatzky, a role that included developing financial education programs, interviewing subject matter experts and helping to produce television and radio segments. Arielle has appeared on the "Today" show, NBC News and ABC's "World News Tonight," and has been quoted in national publications including The New York Times, MarketWatch and Bloomberg News. She is based in Charlottesville, Virginia.

Published in

Head of Content, Investing & Taxes

Arielle O’Shea leads the investing and taxes team at NerdWallet. She has covered personal finance and investing for nearly 20 years, and was a senior writer and spokesperson at NerdWallet before becoming an editor. Previously, she was a researcher and reporter for leading personal finance journalist and author Jean Chatzky, a role that included developing financial education programs, interviewing subject matter experts and helping to produce television and radio segments. Arielle has appeared on the "Today" show, NBC News and ABC's "World News Tonight," and has been quoted in national publications including The New York Times, MarketWatch and Bloomberg News. She is based in Charlottesville, Virginia.

You’ve heard of investing. And you may have heard of day trading. But are you familiar with swing trading?

What is swing trading?

Swing trading is when you buy and sell financial assets (like stocks) faster than long-term investors, but slower than day traders. Swing traders typically hold their positions for a period of several days to several weeks in an attempt to benefit from price “swings,” or interim highs and lows within a larger trend.

Here are more differences between swing trading, day trading and long-term investing and what you should consider before trying out swing trading.

Brokerage firms

on Charles Schwab's website

on E*TRADE's website

on Vanguard's website

on Fidelity's website

Swing trading vs. day trading vs. long-term investing

As mentioned above, swing trading is a middle ground between day trading and long-term investing. But conceptually, it has more in common with day trading.

Day traders and swing traders both pursue short-term gains by using technical analysis. The biggest distinction between the two approaches is duration. Day trading, by definition, involves holding positions for less than a full trading day, and sometimes for as little as a few minutes. Swing trading typically involves a multi-day holding period, and sometimes takes place over multiple weeks.

Paper trading allows you to practice advanced trading strategies, like swing trading, with fake cash before you risk real money. Here are the brokerages that offer free paper trading accounts.

The methodology of swing trading is also slightly different than that of day trading. Swing traders think about long-term trends when selecting positions, and then try to buy and sell at intermediate highs and lows within those trends. Day traders are largely unconcerned with the long-term and instead try to buy and sell based on small intraday market fluctuations.

Due to the difference in holding periods, swing traders typically make fewer trades than day traders, but pursue a higher profit from each trade.

Alternatively, long-term investors pursue gains over a period of years or even decades. They generally use fundamental analysis to estimate a company’s future growth, dividend-paying potential or rebound potential, and they buy and hold that company’s stock until they’re ready to sell.

Style

Holding period

Potential source of returns

Day trading

Minutes or hours.

Intraday market fluctuations.

Swing trading

Days or weeks.

Minor highs and lows within a long-term trend.

Long-term investing

Months or years.

Earnings growth, rebounding of an undervalued asset, or dividend income.

» Read more about the general differences between trading and investing

Swing trading strategies

Swing traders often use statistical indicators like moving averages and support or resistance levels to determine when to buy or sell stocks.

Moving average crossings

A moving average is the mean price of a stock over a given period. A stock’s five-day moving average is its mean price over the last five days, and its 10-day moving average is its mean price over the last 10 days.

Moving averages can be plotted as lines on a stock chart, along with the price of a stock itself. Swing traders often interpret crossings between these lines as signals to buy or sell.

For example, if a swing trader is holding a stock whose price was previously above its five-day moving average line, and then the price line crosses under the moving average line, the swing trader might take that as a signal that the stock is losing momentum, and sell it.

Earn 3.71% APY by investing in U.S. Treasury Bills*

Support and resistance level breakages

Sometimes, when a stock is rising, it repeatedly approaches a particular price level and then pulls back, as if it’s “struggling” to break through that price level. That “ceiling” on a stock’s price is known to traders as a resistance level.

On the other hand, sometimes stocks that are falling — or those that are bouncing up and down chaotically — fall to a particular price level repeatedly before recovering, as if that price level is acting as a floor. Traders call that "floor" a support level.

As with moving averages, swing traders often use crossings or “breaks” in support or resistance levels as sell or buy signals. For example, if a stock’s price was previously fluctuating below a particular resistance level, and then the price line rose above, or “broke,” that resistance level, a swing trader might interpret that as a signal to buy the stock.

» Learn more about statistical techniques for stock analysis.

Should you try swing trading?

If you’re thinking about trying out some swing trades, ask yourself some questions about your financial situation first.

Are you paying your bills? Saving money? Investing some of those savings in a mix of low-cost index funds to prepare for retirement and other financial goals?

Do you have money left over after all of the above — money you can afford to lose?

If your answer to all of these questions is “yes,” then feel free to swing trade to your heart’s content (with the money you can afford to lose).

But if you answered “no” to any of those questions, swing trading is probably not right for you right now. After all, most traders lose money in their first few months of trading, and many never turn a profit.

The S&P 500 index, on the other hand, has had an average annual return of about 10% since 1926. If you’re invested in that index through index funds or ETFs that track it, that return will be the same whether you’re a novice or a master trader.

Helpful resources