Penny Stock Swing Trading

What is Swing Trading?

Investors take part in swing trading by searching for stocks that have huge potential to move in a relatively short time period. This can typically range from less than one day, to four days long. This strategy is mainly used by day traders and those who trade at-home. Swing traders use technical analysis to look for stocks with short-term price momentum. These traders aren't interested in the fundamental or intrinsic value of stocks, but rather in their price trends and patterns.

In a market that is perfect to swing trade stocks, the stocks tend to trade above and below a baseline value, or in other words, a moving average or exponential moving average (MA/EMA). Typically penny stocks will use MA’s as both support and resistance levels. By experimenting with charts, a set of moving averages can be fit to a stock’s price action, and be used to help with trading decisions. An educated trader would know to buy close to a bottom level MA and sell before the top level, or target MA. Some profits may be left on the table, but the trader will cut his risks down significantly.  For additional reading, please check out “Come Into My Trading Room: A Complete Guide To Trading" by Dr. Alexander Elder. This book is great for those beginning to trade. Also, check out our pages Technical and Momentum Trading to augment your swing trading strategy.

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