Swing trading is sometimes known as 'momentum trading' because it takes advantage of price uptrends or downtrends. To get into a swing trade, you're typically entering the market during brief counter-trend pullbacks to ride the momentum of the original trend.

Swing trading is not high-speed day trading which seeks to exploit minor price fluctuations each day. Instead it seeks to capitalize on medium-term breakouts after a period of consolidation or correction is complete.

A swing trade is typically held for days or even weeks as a given stock, stock index, futures contract, etc. makes higher highs or lower lows.

Swing traders go for the "meat" of the move and then get out again. Hitting the exact high and low of the move isn't important, though. The middle range is enough, and that normally takes a few days or weeks to unfold.

So in effect, this kind of trading is a hybrid of the slower pace of buy-and-hold investing and the accelerated potential gains of day trading. When done well, swing trading will build your equity considerably more quickly than 'buy and hold' investing for the following reasons:

1) You can go long or short with equal bias (you're not blinded to see only one side of a given market), and
2) You can turn over your money more quickly to take advantage of a new trend as it materializes

An additional advantage is that it works well for part-time traders, especially those trading while at work. After all, many workplaces will place software or website restrictions on their work computers.

Even if you work from home, you might be too busy with other work to do day trading. So while day traders typically stay glued to their computers for hours at a time, swing trading doesn't require that type of dedication.

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Brian Heyliger is a successful futures day and swing trader who specializes in the e-mini S&P, Treasury Bond and other high-probability, high-profit markets.

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