Swing Trading With Swing Charts by Teresa Lo
Here’s how you can use swing charts as
an indispensable tool for all your trading.
Of late, swing trading has
caught the attention of
many market participants.
This migration of
traders from “day”
to“swing” trading has most likely been caused by the severe
contraction of price movement in most
stocks and stock indexes over the past
few years. For example, Amazon (Figure
1) is a typical high-profile Internet
stock. On January 29, 1999, Amazon’s
20-day average true range (ATR) was
$10.30. As of October 31, 2003, the
value was $1.93. Roughly, this means it
now takes more than a week for Amazon
to cover the amount of movement
that it used to cover in a single day back
during the market frenzy, rendering
intraday trading quite a bit less profitable
than it used to be.
While there seems to be no lack of information offered on
the subject of swing trading, the meaning of the term swing
is often unclear. Let me provide some insight into how to use
swing charts as an indispensable tool not only for swing
trades but also for any type of trading.