We have described what swing trading is and how one participates in it. However, swing trading needs a far deeper understanding of fundamentals. This means understanding the basics underlying assets or companies, how valuable they are to people. So, here, we will look at the how to work with swing trading.
The first thing swing traders can do is look for a baseline. This number indicates the relative success of an asset or company. How does it do this? Well, it is usually to do with a companies profits. For example, it could be how many sales of a product they make over a certain time period.
Going on from here, it would be wise to use a risk/rewards comparison. This will help swing traders balance out how worthwhile an investment could be considering the risk against reward. If we were to look at investment it would be something as such. A 1:2 risk/reward means risking one, say a dollar, for the potential reward of 2 dollars.
However, if a swing trader is still unsure about their trades, they still have options. While still in the trade, that is. A popular option for such risky trades is a stop-loss order. You can set a certain price point. Once a stock reaches this point, a machine will automatically trade it for you. This is a great way to make sure you minimise losses. The point you place is the minimum, past which you could not tolerate a loss.
Finally though, all of these figures can be hard to find. Checking the factors for all companies can be tiring. There is an easier way. Stock screeners are a sort of filter for stocks. If you can filter out certain companies that do not meet certain criteria. This makes it easier to look at the figures of the companies you are more likely to have interest in.