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How to Swing Trade ETFs

Learn the basics of how to swing trade ETFs for maximum profit potential.

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ETFs, known as exchange traded funds, are a popular choice amongst swing traders. Today we will share the basics on how to swing trade ETFs for maximum profit potential.

Understanding ETFs and Swing Trading

An ETF is traded just like a stock on the market and holds assets such as stocks, commodities, or bonds. They have variable price changes throughout the trading day as they are bought and sold, just like stocks do.

There are a few advantages to trading ETFs, such as being able to diversify, the ability to sell short, and no minimum purchase requirements. They generally have lower prices, making them a good choice for investors working with little cash flow.

Swing Trading is a trading strategy in which you purchase shares and hold them for a small period of time, though this period of time is not defined as a certain absolute time period. You may hold a stock for a few days, a few weeks or even a few months, depending on the action of the stock.

The Benefits of Swing Trading ETFs

There are a number of benefits of swing trading ETFs, which make this strategy a popular choice for many investors:

  • Opportunity for Gains With Less Time: Since you will likely only be holding the ETF for a few days or a few weeks depending on the market, you will likely see a return within a relatively short period of time. Unlike long term investors who may wait years to see any return on investment, you will likely see a return rather quickly.
  • Free Up Capital: When you have a lot of money tied up in long term investments, you could potentially find yourself with a lack of funds to continue investing in new opportunities that come along. When you swing trade, you have the ability to adapt to the market and have capital when you need it.

Once you understand the basics of how ETFs work and how to swing trade, you are ready to understand how to swing trade ETFs.


Here is How to Swing Trade ETFs:

Step 1: Research Which Industry You Want to Invest In:

The first place to start in swing trading is learning how to find the best ETFs to swing trade. You can do this by researching various industries and sectors. For example, perhaps you want to invest in a biotechnology ETF or the automotive industry.

Step 2: Choose the ETF that Meets Your Criteria

In our article on how to pick stocks for swing trading, we cover a few indicators that you can use to formulate your swing trading strategy. For example, you may want to choose a stock which has a decent amount of volatility. What this means is the price is constantly changing and going up and down. This gives you plenty of opportunity to possibly earn a nice return. However, it is important to note you will want to choose an industry which is on an upward trend, otherwise if you hold the ETF too long you risk losing money.

Step 3: Use a Suitable Online Broker

Choosing the right online stock broker for swing trading ETFs is essential if you want to be profitable. Be sure to carefully research all applicable trading laws, restrictions, and regulations. You will also want to make sure the online broker charges a reasonable fee. Do your homework here and it will make your life much less complicated.

Step 4: Create an Exit Strategy

Since the whole point of swing trading is to only hold the stock for a short period time of a few days or weeks, it is essential you have a strategy to exit. There are a few strategies for this, but the common one is to have a set price in mind and exit at that point once that price is reached. Learning how to read stock charts and brushing up on candlestick patterns can help you determine a target price for the highs and lows so you know when it’s time to exit.

Step 5: Practice and Learn

One of the best things you can do in the very beginning is to practice using stock market simulation games. Track your progress, the things you learn, and develop your strategies. Keeping a journal can be very helpful.

Step 6: Implement the Plan

When you are feeling confident in what you have learned about swing trading and ETFs and you have developed your own strategy and done a suitable amount of research, you are ready to start trading!

Do you have any tips for beginner traders to share about how to swing trade ETFs? Share your thoughts in the comments below or join the discussion on our stock forums!

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