Swing Trading: 3-5 Day Holds

What Is Swing Trading?

Swing trading means holding positions for 2–10 trading days to capture one meaningful price move — a "swing" from support to resistance or from a breakout to an extended run. Unlike day trading, you do not need to watch screens all day. Unlike long-term investing, you are not holding through multi-month drawdowns.

Core Setup Criteria

• Stock is in a clear uptrend on the daily chart (higher highs and higher lows)
• Price is pulling back to a rising 20-day or 50-day moving average
• Volume is drying up on the pullback — sellers are exhausted
• A catalyst exists: earnings beat, breakout from a base, sector momentum

Entry and Exit Rules

Enter on the first up-day after the pullback, ideally with increased volume confirming buyers are returning. Set your stop below the recent swing low — typically 3–6% below entry. Target a 2:1 or 3:1 reward-to-risk ratio. If the stock gaps against you at the open, honor your stop and exit immediately.

Position Sizing

Risk no more than 1–2% of your total portfolio on any single swing trade. If your stop is 5% away and you want to risk $200 on a $10,000 account, your max position size is $4,000. Pre-calculate this before entering every trade — never let a loss force the math on you.