Chapter 2

Understanding the Swing Trader’s Two Main Strategies


Bullet Considering different trading strategies and styles

Bullet Understanding technical analysis: charts, trends, and indicators

Bullet Figuring out fundamental analysis: catalysts, growth stocks, and value stocks

As a soon-to-be swing trader, how do you uncover promising opportunities? And after you uncover those opportunities, how do you time your entries and exits? Very good questions, and I’m glad you asked.

Like all traders, swing traders rely primarily on two main strategies:

  • Technical analysis: Technical analysis is the study of price and volume without regard to the fundamentals — things like profits or sales for a company or supply and demand in the case of commodities like oil or gold. In other words, technical analysis deals with charting and technical indicators. Traders, those with time frames measured in days or weeks, usually exclusively use technical analysis. They care less about a company’s long-term performance than how a stock will perform in the next few weeks.
  • Fundamental analysis: Fundamental analysis focuses on what a company is worth given its assets (what it owns), its cash flows (what it earns), ...

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