How to Swing Trade ETFs

Focus: ETFs

There are as many strategies for swing trading as there are ETFs, writes Cory Mitchell on, and any number of strategies and ETFs can be used in a profitable manner to capture price moves.

While the long-term buy-and-hold strategy is favored by many more passive investors, savvy and active traders have also embraced another form of trading-swing trading. Swing traders attempt to capture the bulk of a price move, and they have gravitated en masse to using ETFs as their trading vehicle of choice thanks to the unparalleled liquidity, ease-of-use, and cost efficiency of these products. With over 1,400 exchange-traded funds on the market, active swing traders have no shortage of instruments at their fingertips, allowing them to implement any number of strategies across a global basket of asset classes.

Swing Trading 101
Swing trading is a form of trading that attempts to capture a profit from an ETF price move within a time frame of one day to a few weeks. There is no set time limit on a swing trade, but the idea is to get in and out while capturing a good chunk of a move, and then find something else that is moving or about to move. Trades typically last at least a full day or more, but positions are rarely held for more than a few weeks. Trades lasting longer than this typically start to see multiple moves up and/or down, which contradicts the swing trading philosophy of capturing one major move (or a part of it) and then getting out.

Since swing traders are only concerned with a short-term move, technical analysis is the primary tool used to find trade candidates.