Master swing trading techniques and earn steady profits through cyclical events

When discussing investments, people often hear two voices: one advocating “buy good stocks and hold for a lifetime”—the value investing philosophy, and the other promoting “day trading for quick profits”—the trading mindset. But in reality, value investing tests patience, and day trading carries high risks similar to gambling. There’s a more practical option between the two—swing trading techniques, suitable for investors who want to profit steadily from market fluctuations in the short term.

Swing Trading vs. Other Trading Methods: Why Do Most People Choose Swing?

Swing trading typically spans several weeks to months. It doesn’t require constant monitoring; instead, it leverages the market’s ups and downs, buying low and selling high to make profits. In comparison, buy-and-hold strategies are too slow, and day trading involves excessive risk. Swing trading falls in between, making it a common way for investors to build wealth.

The key is that successful swing trading doesn’t aim for huge profits—just a steady return of around 50%. This mindset makes swing trading’s risk manageable—you don’t need to buy at the absolute bottom or sell at the peak, just capture the main trend.

Core Steps of Swing Trading: Four Key Actions

Step 1: Study Market Cyclical Events

The foundation of swing trading is identifying “longer fermentation events”. These include changes in industry fundamentals, interest rate cycles, technological breakthroughs, etc. They don’t end suddenly in the short term, so entry and exit points are more flexible—unlike day trading, which demands split-second decisions, or value investing, which involves waiting through long nights.

By paying daily attention to news, economic policies, and industry trends, you can spot these “long fermentation events.” Developing this habit naturally reveals swing trading opportunities.

Step 2: Select Assets with Good Trends and Sufficient Liquidity

Not all assets are suitable for swing trading. The trick is to choose assets with stable, clear, and consistent trends. Stocks with low trading volume are hard to sell when prices fall, so liquidity must be sufficient.

Specifically, suitable assets include major indices, industry indices, currencies, gold, etc. Individual stocks are usually less ideal because they can be easily influenced by single factors or manipulated by big players. If you do trade individual stocks, prefer large-cap, blue-chip stocks like Apple (AAPL), Microsoft (MSFT), TSMC, which are industry leaders with strong risk resistance.

Step 3: Use Technical Analysis to Judge Entry and Exit Points

While fundamental analysis underpins swing trading, technical analysis is crucial. Common indicators include MACD, KD, Bollinger Bands, used to identify trends; support and resistance levels help pinpoint precise buy and sell moments.

Market sentiment also matters. For example, if a stock has been trading in a range (say, $20–$30), and suddenly buyers rush in at $35, it indicates strong confidence in further gains, forming a “momentum”. Recognizing whether this is a “long fermentation event” can significantly boost your win rate.

Step 4: Set Reasonable Stop-Loss and Take-Profit Points

Never dream of “buying at the bottom and selling at the top”—that’s a surefire way to miss opportunities. Setting rational stop-loss and take-profit levels is essential for capturing main trend profits steadily. Stop-loss protects your capital; take-profit locks in gains. Both are vital risk management tools.

Five Key Swing Trading Techniques to Profit from Market Cycles

Interest Rate Cycles and Currency Fluctuations

The Federal Reserve’s rate hikes or cuts are based on long-term economic issues—inflation and employment. These aren’t short-term phenomena, so rate cycles often last over half a year or more.

The logic: after rate hikes begin, go long on the USD. The rally can last several months. You don’t need to predict the exact peak—just monitor whether inflationary pressures are easing. For example, when inflation peaks and starts to decline, you can exit long positions. This approach has a high success rate because it follows fundamental trends.

Pursue Industry Breakthrough Technologies

In late 2022, ChatGPT emerged, widely seen as changing how people search for information and threatening Google’s dominance. Whether true or not, market funds will chase this industry for a long time. Going long on related stocks or ETFs can be highly profitable.

However, beware of “concept stocks” that chase hype. It’s better to invest in industry ETFs or indices. Exit when prices break previous highs or before earnings reports, as hype-driven speculation can overheat. Don’t be greedy—leave some fish for others.

Long-Cycle Industries with Supply-Demand Imbalances

Industries with long production cycles, like agriculture or semiconductors, often face short-term supply-demand mismatches. For example, conflicts like Ukraine-Russia affect grain supplies, making commodities like soybeans, wheat, and corn suitable for swing trading.

Similarly, chip shortages caused by port blockages and overordering lead to price increases. Since production takes time and new factories take years to build, supply remains tight short-term, ideal for swing trading.

Exit timing can be based on production cycles: agricultural commodities may last months, so a few weeks of holding; chip shortages may persist 1–2 years, so a few months’ investment. Conversely, products like masks or oil, with rapid supply adjustments, are less suitable for swing trading and better for short-term trades.

Assets Under QE and QT Policies

Global GDP growth is limited because real economic growth depends on value creation. Meanwhile, governments can print money at will—during the 2020 pandemic, the US printed $4.5 trillion in a short period, doubling the dollar supply, but real assets didn’t grow proportionally, reducing currency purchasing power. During such times, investors flock to gold, Bitcoin, and other scarce or stable assets.

These assets are ideal for trading the effects of QE (quantitative easing) or QT (quantitative tightening). Exit points can be set for several months or half a year, as policy directions tend to be stable in the short term. The same logic applies to scarce resources like prime real estate—when money is “worthless,” these assets hold value better.

Stocks in a Bullish Pattern

While fundamentals determine long-term trends, market sentiment influences swing trades. Investors often hold onto winners and sell losers, and moving averages reflect the average cost of holdings over time. Swing trading involves “buying high and selling higher,” especially when a stock breaks out after a long consolidation.

For example, if a stock fluctuates between $20–$30, and suddenly someone aggressively buys at $35, it signals strong confidence and a potential trend. The market will attract more buyers, forming a momentum. As long as you confirm it’s a “long fermentation event,” your success rate increases significantly.

CFD Tools: Amplify Swing Trading Gains

Although the above techniques have high success rates, some markets have limited volatility—like forex, where daily swings may only be 10%. For such cases, CFDs (Contracts for Difference) are a better choice.

CFDs don’t require owning the underlying asset; instead, they allow trading on price movements. Similar to futures but much safer—risk is limited to your initial capital, with no negative balance. They also offer leverage, sometimes up to 200x.

For example, in early 2022, as the Fed started raising interest rates, the US Dollar Index surged about 15% from March to October. Using 10x leverage, you could have gained 150%. This “big trend” swing is ideal for CFD trading.

Three advantages of CFDs for swing trading:

✔️ Moderate leverage amplifies gains, suitable for small capital

✔️ No worries about black swan events causing negative balances—risk is limited to your deposit

✔️ Both long and short positions are available, offering flexible and agile trading

Summary of Swing Trading Techniques

Swing trading is fundamentally about riding the trend—suitable for most investors. Instead of obsessing over short-term fluctuations, focus on long-term trends and wait for opportunities. By mastering cycle identification, asset selection, technical analysis, and risk management, you can achieve steady profits in the market.

The key is to keep observing the market, accumulate experience, and combine intuition with data—this will help you find your own rhythm in swing trading.