Swing Trading Penny Stocks
Investing in the stock market can be very dangerous, but there are many investment models available that can help you. So fret no more! One effective model is to swing trade penny stocks. Investors take part in swing trading by looking for penny stocks that have high potential to move in a relatively very short period of time. When investors swing trades stocks, he or she normally only holds that stock from less than one day, to four days long.
In a market where it is ideal to swing trade penny stocks, the stocks tend to trade above and below a baseline value, or simply put, a moving average or exponential moving average (MA/EMA). Penny stocks apply MA’s for support and resistance levels as well. Through charts experimentation, a set of moving averages can be fit to a stock’s price action, and be applied when making trading decisions. One who knows how to buy close to a bottom level MA and sell before the top level, or target MA, is no doubt an educated trader.
To effectively swing trade stocks, there are a few instructions you must do for your consideration.
First, you should understand how and why stock changes price over the course of its market life. In order for you to understand these changes, the swing trader is advised to use several different technical analysis strategies to predict the price movement of a particular stock by using market or stock penny trends.
Second, you should develop a trading criterion on which to base your technical analysis. Technical analysis incorporates the price, volume, strength, trading range and moving average of the stock. One factor that is important to the price movement of the stock is the trading criterion. There are no absolute set criteria here, but there are popular strategies you can apply.
Third, you should sell the penny stock once it reaches the apex of the swing in stock price. When swing trading, you only want to keep the penny stock for a few days as it is moving upward, but once it moves up for more than a few days, that’s when the swing trading analysis shows the stock will begin to lose its value.
Making money with swing trading is very important, so in order for you to do that, keep on mind that the real truth about the stock market is that it always works in a wavy pattern. In fact, its price swings in the same way most of the times do. Constant swings in the price list of the stocks can be an advantage. Because this will enable you to enter your price value when the stock market is going on a long term basis and at the same time it will allow you to exit immediately when the market reaches the highest point of the swing.
And by acknowledging the patterns through different indicators like setting your charts with the use of candlesticks, Bollinger Bands and Stochastic Oscillator, these will help you to have a proper track and time when the price may come and go to the bottom level. The only problem associated with this though is that stock market contains thousands of corporations which trade publicly which makes it very difficult for people to follow and apply each of them without some form of help. Now, for you to be able to solve this problem, the easiest way is to make use of swing trading software or a stock screener that is a trading tool to identify the opportunities for Swing trading which are in high recommendation list. This way you can never go wrong searching for the best trades in the world! Happy trading!