Exploiting a trend between two pivot points is… swing trading, but it could also be trend trading or even trend following. There are two styles of trading a trend. Getting onto a trend with a tight stop and then loosen the stop if the position gets into positive territory is one of them. In the extreme the stop loss point gets only dragged to the entry point and from there on the trader mutates into an investor.
The other version of trend trading by means of swing trading is done by using a trailing stop or by trying to catch the turn of the trend for the exit. This form of swing trading is capable to catch large chunks of a trend. In the adverse case of a trend that didn’t want to materialize, this method can still make a gain in contrast to the investor style of trend trading. The investor would have to mutate back into a trader and execute his stop at the entry level.
Switching in and out of a trend or doing real swing trading needs smooth swings. The trader-becomes-investor style needs only a short smooth entry passage in order to not get caught by the stop. Guess yourself which type of price action is found more often in the markets.
Trading the pivot points is therefore done best by constantly changing the set of trading targets. You need a smoothly running price for swing trading! Entering a long-term trend with swing trader tools, but then looking at the trade more with investor eyes, needs only a long-term driving force, for instance, a growth company and its stock.
Combining both styles, that is entering into a growth stock investment and then swing trade in and out of it, or even switching the position between long and short, will likely not work as good as some sort of the “enter and hold” strategy. The smooth phases are simply gone after the successful entry. This is especially true with ETF trend trading, because often the coherent move of an ETF is overlaid with random noise of some of its inner components.
Enter and hold is meant here in contrast to buy and hold, which mostly implies ignoring trends and chart formations at all. Buy and hold is done by bottom fishers. By the way, the better bottom fisher system waits for some signs of new life instead of trying to catch the falling knive. In other words, it doesn’t pay off to ignore the recent price action completely.
So, back to swing trading vs growth stock trading. Both is all right. Essentially the trader has to decide beforehand what type of trading is suiting him more. Swing trading done right requires constant reselection of the trading targets along with jumping in and out and growth trend trading is the more relaxed version for the proactive investor.
