Swing

Swing

A swing can either refer to a type of trading strategy or a fluctuation in the value of an asset, liability, or account. Swing may also be used to reference swing trading, which is a trading strategy where a trader attempts to capture gains by holding a security for a short period, while waiting to see if a trend develops. A swing in the financial markets, which is caused by increased volatility, can be seen easily when the price of certain security undergoes rapid, directional change in value. Swing may also be used to reference swing trading, which is a trading strategy where a trader attempts to capture gains by holding a security for a short period, while waiting to see if a trend develops. On the other hand, financial institutions such as banks, hedge funds, and asset managers do not often have the luxury of swing trading a position over a matter of days, because the large size of their order would usually have too much impact on the price of the asset. A swing in the financial markets, which is caused by increased volatility, can be seen easily when the price of certain security undergoes rapid, directional change in value.

A swing can either refer to a type of trading strategy or a fluctuation in the value of an asset, liability, or account.

What is a Swing?

A swing can either refer to a type of trading strategy or a fluctuation in the value of an asset, liability, or account.

This term commonly refers to a situation in which the price of an asset experiences a significant change over a short period. Swing may also be used to reference swing trading, which is a trading strategy where a trader attempts to capture gains by holding a security for a short period, while waiting to see if a trend develops.

A swing can either refer to a type of trading strategy or a fluctuation in the value of an asset, liability, or account.
A swing in the financial markets, which is caused by increased volatility, can be seen easily when the price of certain security undergoes rapid, directional change in value.
Swing may also be used to reference swing trading, which is a trading strategy where a trader attempts to capture gains by holding a security for a short period, while waiting to see if a trend develops.

Understanding a Swing

A swing in the financial markets, which is caused by increased volatility, can be seen easily when the price of certain security undergoes rapid, directional change in value. Investors refer to these sharp shifts in price as a market swing. For example, it is not uncommon to see a major index swing from negative territory to positive territory just before the market close, or after an FOMC interest rate announcement.

Swing trading is often used by individual investors to capture profits from the day-to-day fluctuations in a security’s price movement. Traders who use this strategy often use swing highs and swing lows to time their entry and exits points. To find the best stocks to swing trade, many traders use websites that have access to stock market scanners, such as Yahoo Finance, Finviz.com, and StockCharts.com.

On the other hand, financial institutions such as banks, hedge funds, and asset managers do not often have the luxury of swing trading a position over a matter of days, because the large size of their order would usually have too much impact on the price of the asset.

Managing Market Swings: Keep Emotions in Check

Market swings are inevitable. In today’s fast, news-driven environment, it is easy for investors to get caught up in news that can rattle markets. Whether it is legit news or fake news, it has the same effect — it is unnerving and can cause emotional angst. Investors can manage their emotions during market swings by having an investment plan. During times of uncertainty, following a plan helps investors remain calm and ride out the swing.

Market swings present investors with an opportunity to accumulate security's at a discounted price. For example, a 10% drop in the Standard and Poor’s 500 index (S&P 500) allows investors to add some quality names to their portfolio. To manage risk during a market swing, investors can dollar cost average into a stock. To do this, the investor purchases a fixed dollar amount of shares in intervals. For instance, if an investor wants to invest $50,000 into a stock, they might buy it in five $10,000 allotments.

Related terms:

Asset

An asset is a resource with economic value that an individual or corporation owns or controls with the expectation that it will provide a future benefit. read more

Book

A book is a record of all the positions that a trader is holding, showing the quantity of longs and shorts in each security. read more

Federal Open Market Committee (FOMC)

The Federal Open Market Committee (FOMC) is the branch of the Federal Reserve System that determines the direction of monetary policy. read more

Liability

A liability is something a person or company owes, usually a sum of money. read more

Relief Rally

A relief rally is a respite from market selling pressure that results in an increase in securities prices.  read more

Risk

Risk takes on many forms but is broadly categorized as the chance an outcome or investment's actual return will differ from the expected outcome or return. read more

S&P 500 Index – Standard & Poor's 500 Index

The S&P 500 Index (the Standard & Poor's 500 Index) is a market-capitalization-weighted index of the 500 largest publicly traded companies in the U.S. read more

Stag

Stag is a slang term for a short-term speculator who attempts to profit from short-term market movements by quickly moving in and out of positions. read more

Stock Trader

A stock trader is an individual or other entity that engages in the buying and selling of stocks. read more

Swing

A swing can either refer to a type of trading strategy or a fluctuation in the value of an asset, liability, or account. read more