How to Swing Trade Summary (C4): Swing Trading Instruments

Buy How to Swing Trade here: https://amzn.to/3BMRLDr

Swing trading can be applied to a great number of financial instruments.

Here we will cover the most popular ones, including what they are and the pros and cons of swing trading with each.

Individual stocks are what most people think of when they first enter the world of trading. This is when you trade the stock of a specific company such as Nike or Apple.

When you trade an individual stock, you are susceptible to single event risks. For example, a stock may lose value quickly when there is a bad earnings report or negative news such as a corporate scandal.

Conversely, it may shoot up in price if there is a good earnings report or when something positive happens, such as the company inventing new technology.

An Exchange-Traded Fund (ETF) is an investment fund that holds a collection of assets, usually with a specific investment purpose, such as tracking the S&P 500.

ETFs can be traded in the same way as regular stocks, i.e., you can buy, hold, and sell them for day trading, swing trading, or for the long term.

In the US, most ETFs are set up as open-ended investment companies. This gives them more flexibility for futures and options.

You can also get leveraged ETFs which can be good to hold in a trending market (either bullish or bearish) but should not be held for a long period of time due to the risk of leverage when a trade goes against you.

Since ETFs are a collection of assets, they allow you to ride a sector wave (e.g., technology) as opposed to compiling a bunch of individual stocks yourself, which will save you on trading costs and probably a lot of research time too.

This grouping of stocks in a single sector also makes ETFs less volatile than individual stocks because they are more insulated against single event risks. If one company in the fund has a big price drop (or rise), it won't affect the whole ETF in a dramatic way. This means they have less risk, but also offer less reward.

Trading currencies is known as forex (foreign exchange). It is essentially the buying and selling of currencies to profit from changes in exchange rates.

Although it is possible to swing trade forex, it is not the best vehicle, especially for the beginner.

Cryptocurrencies are by nature more volatile than stocks. This can offer more opportunities and greater rewards for the swing trader, but as always, greater reward also comes with increased risk.

Another important factor with trading crypto is that the market never closes, so you can trade at any time as opposed to having to wait for a stock exchange to open.

Options are financial contracts that give you the right, but not the obligation, to buy or sell an asset at a set price before a specific date.

There are two types of options: call options, which allow the purchase of an asset, and put options, which allow the sale of an asset.

Swing trading options can be complicated and are not recommended for the beginner investor.

If you do decide to trade options in the future, be sure to learn about them in depth so you have a very good understanding of what you are getting into.

Read the next chapter here.

Buy How to Swing Trade here: https://amzn.to/3BMRLDr