The financial markets can be enormously complex but most trading strategies fall into just one of two categories: trend trading or swing trading. Both rely 𓃲on charting the price directions over time of individual stocks:

• Trend traders track the price trends of individual stocks over time to pinpoint the ones that are entering an upward (or downward) trend. They buy those stocks and hold them for as long as the trend lasts.
• Swing traders focus on the relatively minor ups and downs in prices that all stocks experience over the short term. They identify low points when a stock is a bargain and high points at which it is likely to retreat again. They buy and sell frequently to take advantage of these price gyrations.

Trends and Swings

Trend trading and swing tradin🐼g each have advantages and disadvantages as well as specific requirements that investors must follow consistently to avoid errors. Randomly applying these contrary strategies can undermine profitability.

First, you need to identify whether you are a trend trader or a swing ✨trader in order to hone your strategy correctly.

Broadly speaking, trend traders are watching 澳洲幸运5官方开奖结果体彩网:macro influences that move the price of a stock over the long term. Swing traders focus squarely on short-term 澳洲幸运5官方开奖结果体彩网:price action to make buy and sell decisions.

The trend trader is taking a risk on an uptrend or 澳洲幸运5官方开奖结果体彩网:downtrend and is content to hold onto stocks until the trend changes. The swing trader works within the boundaries of 澳洲幸运5官方开奖结果体彩网:range-bound markets, buying at pre-determined support levels and selling at 澳洲幸运5官方开奖结果体彩网:resistance levels.

Swing trading tends to work best for shorter time 🧸frames, while trend-following strategies can be applied for month🅘s.

These lines have blurred in recent years due to the availability of 澳洲幸运5官方开奖结果体彩网:real-time charting for all time intervals. 

Which One Fits Your Style?

New traders should choose one of these disciplines early on and stick with it until they've mastered it or decided they're better suited to the other approach.

Experienced traders can mix and match strategies at will, often building highly effective hybrids that require strong discipline but produce excell🎃ent bottom-line results.

This dual effort works best for those with strong multi-tasking skills who can contain each strategy within its proper boundaries while adjusting 澳洲幸运5官方开奖结果体彩网:risk management to address the unique charac♏teristics of h𝕴ybrid strategies. 

For example, long-side swing trades require fast exits at resistance levels such as former highs, while trend-followers might sit on their hands and allow a stock's price to test and break those levels. A hybrid approach might be to sell half the position at the resistance level, keeping the other half in the hope of a breakout.

Trend Trader vs. Swing Trader

The trading characteristics bel🌊ow will help you identify the approach that suits you best.

The 80-20 Rule

The 澳洲幸运5官方开奖结果体彩网:80-20 rule asserts that markets trend only about 20% of the time while spending 80% of the time grinding through a narrow 澳洲幸运5官方开奖结果体彩网:trading range.

The 澳洲幸运5官方开奖结果体彩网:price rate of change rises in trends, attracting the trend trader, and falls in trading ranges, attracting the swing trader.&ꦍnbsp;

Trade Frequency 

Swing traders buy and sell more often for shorter time frames. Trend traders buy and sel⭕l less frequently and hold onto stock🐬s longer.

Position Selection

Trend traders own stocks with the strongest uptrends and short-sell them with the s💞trongest downtrends.

Swing traders buy or short-sell stocks ജwhen their prices hit specific pre-determ🦩ined support or resistance levels. 

Position Size 

Swing traders hold larger posit💦ions for shorter time frames, while trend traders hold smaller positions for longer time frames.

Swing traders apply leverage more o♕ften than trend traders, meaning they're apt to borrow money to increase the size of their stakes.

Position Timing

Swing traders seek perfect timing because the 澳洲幸运5官方开奖结果体彩网:average win or loss for them is smaller than for trend traders.

Tr🌃end traders can miss🔯 the beginning or end of a trend and still book substantial profits.

Entry Strategy

Trend traders buy while momentum is strong or wait for a counter-ꦓtrend to lower risk.

Swing traders take their risks at support or resistance levels, and may offset the risks by positioning in the opposite direction and placing stops to prevent big losses.

Exit Strategy

Swing traders exit positions when stops are hit or profit targets are reached.

Trend traders hold their positions until the trend changes, regardless of the time frame. They place stops at the price level that signals the 澳洲幸运5官方开奖结果体彩网:trend change. 

The Bottom Line

Swing traders and trend traders execute 澳洲幸运5官方开奖结果体彩网:market timing strategies that require different skill sets. Experienced players can successfully mix and match these strategies. New traders should focus on one approach and st🐻ick with it until it's fully maste🦄red. 

The comments, opinions, and analyses expressed on Investopedia are for informational purposes online. Read our 澳洲幸运5官方开奖结果体彩网:warranty and liability disclaimer for more info.