
Start Here
Platform

Tour
Bots 101How it worksLive demo
Tools
Automated tradingOptions backtestingWatchlist scannerPrivate community
Use cases
New investorsStock tradersActive tradersPassive investorsSwing tradersAlgorithmic traders

Templates
By trade type
Stock trading botsOptions trading bots
By strategy type
Bullish options strategiesNeutral options strategiesBearish options strategiesHedging strategies
By style
Active and high frequency botsEvent-based botsTrend trading botsMomentum trading botsStatistic and probability-based botsTechnical analysis botsEarnings strategy bots

Integrations

Pricing
Education

Courses
Overview
By experience
Beginner
What is an options contract?Stock trading vs. options tradingOptions contract specificsCall vs. put options basicsBuying options vs. selling optionsOptions profit and loss diagramsOptions pricing tablesOption moneyness (ITM, OTM, and ATM)Options pricing and the "Greeks"Options expiration and assignmentWhat's our "edge" trading options?Single vs. multi-leg options strategiesSmall account options strategies
Intermediate
Fearless, confident options tradingHistorical volatility vs. implied volatilityPredicting market movesTrade size and capital reservesPortfolio balance and beta weightingHow to choose the best options strategyHow far out to place trades?Strike price anchoring with probabilitiesTips on getting your trades filledAdvanced and contingent orders7 step options trade entry checklist
Advanced
Developing a daily trading routineHow to avoid "Black Swan" eventsAdjusting and hedging option tradesExiting options trades automaticallyOptions strategies we don't adjust (and why)Big picture adjustment strategyWhen to adjust or notAdjusting straddles and stranglesAdjusting credit spreads, iron condors, and calendarsSmarter stop-loss ordersBuilding a diversified options portfolioRolling options trades for duration and premiumOptions expiration week position checklistDealing with stock assignment and dividendsHow to free up trading margin and cash
By subject
Options basics
Why options vs. stocks?What is an options contract?Smart use of leverageOption strike priceOption premiumOption expirationOption contract multiplierProfit and loss diagramsLong call option explainedShort call option explainedLong put option explainedShort put option explainedATM, ITM, and OTM optionsCash vs. margin basicsHigh probability trading definedHow to buy a call optionHow to buy a put optionSingle-leg vs. multi-legWhat is the VIX?Is fundamental analysis dead?
Entering and exiting trades
Game of numbers7 step entry checklistStrong liquidity examplesPicking the next directionScanning for tradesOption pricing table basicsSetting up your trade tabPinning your probability of profitUsing delta for probabilitiesBuy to open vs sell to openBuy to close vs sell to closeMarket, limit, stop loss orders5 types of contingent ordersLimit ordersMarket ordersLimit on close ordersMarket on close ordersAdvanced contingent ordersTaking profits before expirationMechanics of rollingConsider future events
Options expiration
Options expiration explainedWhat is the Options Clearing Corporation (OCC)?Physical vs. cash settlement optionsAmerican vs. European style optionsWeekly options expirationWeekly expiration tags/codesOptions assignment processOptions exercise processTrading timeline (duration)
Bullish options strategies
Bull put spreadBull call spreadLong callShort putBull call backspreadPut broken wing butterflyCall calendar spreadPut diagonal spreadCustom naked putCovered callSynthetic long stock
Neutral options strategies
Short straddleLong straddleIron condorsShort strangleLong strangleIron butterflyUnbalanced iron condors
Bearish options strategies
Bear call spreadBear put spreadLong putShort callBear put backspreadCall broken wing butterflyPut calendar spreadCall diagonal spreadCustom naked callCovered putSynthetic short stock
Portfolio managmeent
No guaranteed tradesDon't do something, sit thereAccount size adjustmentsAvoiding stock market overloadStocks, indexes, & ETFsMonitoring positionsCreating automatic alertsIndividual stock betaPortfolio betaBeta weighting your portfolioUncorrelated industries/sectorsSystematic vs. unsystematic riskEfficient portfolio frontierLimiting undefined risk tradesEconomic calendarConcept of legging
Options pricing and volatility
How to find option price quotesUnderstanding the mathIV vs. IV percentileProbability of profit vs. probability of touchOption probability curveBid-ask spread definedIV expected vs. actual moveThe "Greeks"Fatal pricing errorsInverse ETFsOptions parity
Adjusting trades
#1 adjustment for any tradeWhen to adjust a tradeSingle options trade vs. overall portfolioCall spread adjustmentsPut spread adjustmentsShort strangle adjustmentsIron condor adjustmentsShort straddle adjustmentsCalendar spread adjustmentsDebit spread adjustmentsButterfly adjustmentsUsing stop lossesDelta hedgingRolling positionsPairs hedging

Strategies
OverviewLong callLong putShort callShort putCovered callCovered putProtective putCollar strategyLEAPSBull call debit spreadBear call credit spreadBull put credit spreadBear put debit spreadLong straddleShort straddleLong strangleShort strangleCall calendar spreadPut calendar spreadIron condorReverse iron condorIron butterflyReverse iron butterflyCall butterflyPut butterflyStrapCall diagonal spreadPut diagonal spreadCall ratio spreadPut ratio spreadCall backspreadPut backspreadLong box spreadShort box spreadReversalStock repair

Topics
OverviewAsset allocationAutomated tradingBehavioral financeBondsBrokersCandlestick patternsChart patternsDay tradingDividendsEconomic indicatorsEconomicsETFsEquity investmentsExercise & assignmentFinancial analysisFinancial historyFinancial marketsFinancial modelingFinancial theoriesFundamental analysisFuturesInvesting basicsInvestment accountsInvestment taxesInvestor biasesMarket holidaysMarket hoursMarket indexesMarket indicatorsMomentum tradingOptionsOptions pricingOptions settlementPortfolio managementRisk managementStocksStock marketSwing tradingTechnical analysisTechnical indicatorsTrading commissionsTrading platformsTrading psychologyTrend tradingGlossary
Resources

Workshops

Podcast

Blog
Support

Help Center
Overview
Getting started
What is a bot?Creating a bot
Using the bot wizard
Automation typesAutomation editorBot dashboardBot positionsBot logTemplates and cloningKey conceptsSafeguards and limitsPower of botsBest practices
Bot automations
What is an automation?Scanner automationsMonitor automationsEvent automationsEditing automationsReusing automationsCopying automationsOrdering automationsUsing custom inputsBot level inputsAutomation statusesAutomations library
Bot actions
DecisionsOpen positionClose positionNotificationsLoop symbolsLoop positionsBot tagsPosition tags
Bot examples
Genesis 1.0 botGenesis 2.0 botGenesis 3.0 botTrend trading with stocks botPortfolio trend trading botTrend trading with options botMultiple moving averages botTechnical swing trading botTrend and momentum botWeekly credit spread botRecurring iron condors botThe "Honey Badger" botHybrid spreads botHigh IV rank iron condor bot
Decision recipes
Comparing underlying symbol priceEvaluating symbol typeEvaluating underlying symbol OHLCComparing underlying symbol propertiesEvaluating underlying symbol performanceEvaluating underlying symbol standard deviationComparing underlying symbol price to an indicatorComparing multiple underlying symbol indicatorsEvaluating underlying symbol implied volatility rankEvaluating underlying symbol earnings reportingEvaluating underlying symbol price probabilityEvaluating underlying symbol probability within rangeEvaluating bot propertiesEvaluating bot available capital for opportunitiesComparing bot position count to position typeComparing bot position count to underlying symbolEvaluating bot position count to position type and underlying symbolEvaluating bot last position activityEvaluating bot last activity with underlying symbolEvaluating bot position activity historyEvaluating bot position activity history with underlying symbolComparing bot active orders statusComparing bot active orders status with underlying symbolEvaluating bot position availabilityEvaluating bot tagsEvaluating opportunity availabilityEvaluating opportunity return expectationsComparing opportunity attributesComparing opportunity leg attributesComparing opportunity bid-ask spreadEvaluating opportunity probabilitiesEvaluating position performanceComparing profit target to trailing valueComparing position time to expirationComparing position durationEvaluating position underlying symbolComparing position propertiesComparing position leg propertiesEvaluating position typeEvaluating position sideComparing underlying symbol price to position legEvaluating position tagsEvaluating underlying symbol indicator propertiesComparing multiple underlying symbol indicator propertiesEvaluating MACD technical indicatorComparing Bollinger Bands to symbol priceEvaluating stochastic technical indicatorComparing VIX propertiesEvaluating market time of the dayEvaluating days of the weekEvaluating bot switches
Position statement
Activity summaryPosition detailsTrade detailsOpened positionsClosed positionsCanceled positionsOverride positionsExpired positionsPosition historyManually open positionManually close positionImport position
Order pricing
SmartPricingFinal price settingsPosition summaryOrder detailsWorking ordersManual override
Bot templates
Creating new templatesUpdating existing templatesDeleting templatesSharing templatesUpdating shared templatesTemplate best practices
Cloning bots
Cloning existing botsCloning from templateCloning from shared template
Troubleshooting
Using bot logsTesting your botsNot enough capital warningDaily position limit warningTotal position limit warningPricing anomaly warningMissing or invalid input errorDaily symbol limit errorExcessive errors failsafeOverlapping strikes failsafePrice exceeds strike-difference errorOptions expiration protocolDuplicate orders errorOptions approval level errorBot event loopsStock splits and corporate actionsSupported browsersSupported countries
Community forum
Community guidelinesCrafting your introductionSending group messagesSending private messagesAttaching bot templatesReceiving bot templatesAttaching automationsReceiving automationsFollowing tradersPosting publiclyEditing posts and messagesSubscribed discussionsUsing bookmarks
Using backtester
Running a new backtestBacktesting results summaryModifying existing backtestsMy backtestsInstantly create bot from backtestBacktesting research databaseTop backtestsBacktesting errors
Account settings
My profileTrading accountsConnecting to TDAmeritradeConnecting to TradeStationConnecting to TradierIncompatible accountsPassword managementSession timeoutTwo-step authentication
Technical docs
Infrastructure and securityAutomation structureAutomation behaviorData feedsOrder handlingTrade enforcementsBroker rejection errorsBot limitationsProfit and lossFair value pricingDecision propertiesDecision calculationsParameter selectionCalculating probabilityPlatform indicators

Contact
Send FeedbackReport IssueEmail Us
Option AlphaOption Alpha

LoginSign Up
EducationSwing TradingAn Introduction to Swing Trading

An Introduction to Swing Trading

Swing trading can be a great way to capitalize on short-term trends and manage risk. Here are swing trading strategy basics you can use to get started.

You want to make sure you're always looking for the best opportunity when you're trading. That's why swing trading can be a great option - it allows you to capitalize on short-term trends while minimizing your risk.

We'll discuss the basics of swing trading and share strategies you can use to optimize the approach. We'll also provide some tips on staying disciplined when swing trading.

What is swing trading?

Swing trading is a strategy that focuses on long-term trends and price movements, usually spanning a few days or weeks. Swing traders typically enter positions with the intent to hold the positions for a relatively short timeframe. This makes swing trading different from buy and hold investing, which usually has longer timeframes and investment horizons.

A swing trade is commonly defined as any trade entered and exited within a few hours to several days or weeks. The key to swing trading is to identify potential price movements based on market activity over shorter timeframes and take advantage of those movements by promptly entering and exiting positions. 

Because swing traders rely heavily on technical indicators such as support levels, resistance levels, moving averages, and trendlines, it is considered more of a quantitative approach than other trading strategies. 

However, swing traders must also possess strong analytical skills and have deep knowledge of financial markets to succeed at swing trading.

Day trading vs. swing trading

So what are the key differences between day trading and swing trading?

The main difference between day trading and swing trading is a position’s duration. Day traders are focused on very short-term price movements, while swing traders often hold their positions for several days or even weeks. Day traders may place many trades in a single day, but they typically won't hold positions overnight. 

Another key difference is that day traders tend to use more leverage than swing traders. Leverage is a tool that can help you amplify your returns, but it can also lead to more significant losses if used recklessly. 

Because of the higher leverage levels, day trading is often considered a more risky trading strategy than swing trading.

Swing trading for beginners

How do you get started swing trading?

First, swing trading is all about momentum. Swing traders often enter positions when stocks are trending and exit when momentum fades, looking to capture short-term price movements. You must identify stocks moving significantly in one direction and ride the momentum. 

Second, you need to have a defined strategy. Without a strategy, you will not be able to make consistent profits. Many traders narrow the universe of stocks they follow and focus on a few specific setups in a handful of securities.

Finally, you need to be patient. Swing trading takes time, and you will not see results overnight. Discipline, patience, and the willingness to act on the right opportunities are important characteristics of swing traders.

A simple swing trading strategy

A simple swing trading strategy example is a support or resistance breakout.

Support and resistance example

The previous day's high or low could be used to initiate an entry order. A stop-loss can then be placed outside the previous day's high or low. This strategy is best used in a market with strong momentum.

The position size will depend on your risk tolerance and overall market conditions. Typically, a position should risk no more than 1-2% of your total account balance.

Best indicators for swing trading

Several technical indicators can be used for swing trading. Momentum, moving averages, and support and resistance levels are some of the most popular. Using these technical indicators, swing traders can identify potential entry and exit points in a stock's price movement.

Momentum is a measure of how fast a stock’s price is moving. A momentum indicator such as the Relative Strength Index (RSI) can identify momentum shifts and help traders take advantage of momentum-driven trends in the market.

MACD, or Moving Average Convergence Divergence, is another popular momentum indicator. The MACD uses both a short and long-term moving average to measure momentum in a stock's price movement.

Moving averages are also commonly used to identify trends and key support and resistance levels. When the stock's price is above the moving average, it is generally considered an uptrend. If a stock's price is below the moving average, it is generally considered a downtrend.

Support and resistance levels are important technical indicators that help swing traders identify potential entry and exit points. These levels are determined by the number of buyers and sellers in the market and, along with RSI, can be used to identify when a stock is overbought or oversold.

Best trailing stop for swing trading

The best trailing stop for swing trading varies depending on a trader's individual preferences and trading strategy. One popular type of trailing stop is the percentage trailing stop, which is based on the percentage gain or loss made in a security. 

For example, a 2% trailing stop would automatically sell a security if it moves more than 2% against the trader's position. If a position’s value increases 5%, the 2% trailing stop would follow (“trail”) the position and hope to lock in a gain of at least 3% if the position then begins to fade. 

The percentage amount of the trailing stop is often based on the underlying security’s volatility and the expected duration of the trade. More volatile stocks typically have a wider percentage stop, while those with less volatility could use a narrower percentage stop.

Some traders use momentum indicators such as MACD or RSI to determine when to exit a trade using a trailing stop. If a trader used a momentum indicator to enter a position, a momentum reversal could be used as an exit indicator.

Automating swing trading strategies

Automation can be an excellent tool for swing trading strategies. As mentioned above, trend and momentum technical indicators are often used to identify entry and exit points. Entering and exiting positions can be automated, so you don’t have to watch multiple ticker symbols and indicators.

Learn how easy it is to automate a swing trading strategy in this Technical Swing Trading Bot example.

Join 200k+ options traders
Thank you! Please check your email!
Oops! Something went wrong...
Be the first to get notified when we publish new updates.
No items found.
No items found.
No items found.
No items found.
No items found.
No items found.
On this page
Share this





No-code, fully automated trading for stocks and options.

HomeAboutLegalStatusContact
©2022 Option Alpha. All Rights Reserved. Patent Pending USSN 63/118,547