Range and Swing Trading Methods
Range trading is seen as the opposite of trend following in some ways.
Range trading looks at a stock’s value over a specified amount of time – a range. According to range trading, every time a stock hits a high, it will fall back to a low, and vice versa, creating a price range. Traders utilizing this strategy will buy a security at the low price in the range, and, if their calculations are correct and the price rises, will sell it at a high price in the range.
Pros of Range Trading
- An accessible, easy to follow strategy for a beginner.
- Focuses on technical analysis, ignoring other outlets of information that could cloud and distract day trader.
Cons of Range Trading
- Could require more capital for trading.
- Reliance on the security to stay within its range.
Swing trading is a style of trading where a trader will hold onto a security for a few days to a few weeks. Although it is not considered day trading, it is a trading style that some day traders might consider, depending on what their current situation calls for, and also what their analysis dictates.