To invest and earn profit in the stock and capital market, there are different methods, one of these methods is fluctuation. This method is suitable for short-term investors. In the fluctuation method, the investor buys a share within a short period of time, about one to three days, and sells it after the fluctuation. It is true that this method of earning profit is not easy, but due to the attractiveness and excitement of profit, many investors use this method. In this article, we are trying to introduce you to the swing method completely.
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Before we go to the explanation of oscillation, it is better to first introduce you to the term oscillation and oscillator. Fluctuations and changes in stock prices in the short term are called volatility. People who use the changes in stock prices to gain profit in this short-term period are called swingers.
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What is oscillation?
Buying and selling in a short period of time to earn 3 to 10% profits is called fluctuating in the stock market. Of course, swinging is a complicated method and you must have a high skill in reading charts and reading the market. In fact, every investment is not able to do this method, and many people suffer heavy losses after entering the capital market, due to the greed of short-term profit and not having enough information about fluctuations. As this method can bring you a significant profit very quickly, at the same time it can cause you to lose your capital, so stay with us.
Investors who seek to fluctuate in the stock market are divided into two categories
People who are the initiators of the upward wave of share.
People who surf. This group of people ride on the created wave and continue the process.
The first category is people who start step purchases. But the second group ride on the wave created when they hear the positive news of stocks started by the first group. So, when transactions between these two groups take place, the share price increases and a queue to buy shares is created. At this time, it is the turn of the first group to exit and the supply on the share increases.
Now, if the second category has a good chance and the company has other reasons to increase the share value, the surfers will continue on the upward trend for some time. But if this does not happen after the exit of the first group, the stock may fall and the second group may lose. In fact, the first group benefited from this trade by having swing skills.
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Oscillation information and tools needed
Knowing the confidential information of the company
Oscillators who work professionally in the stock market know more about the company’s secret information and plans than other people. This group of people will be able to be one of the first groups to enter the share and benefit from all changes and price fluctuations due to their connection with the actors of the share and knowing the important news of the company. When the company’s information is publicly available to the public, these types of swingers will exit the stock.
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Currently, one of the common methods of fluctuation in the stock market is technical analysis. With this method, investors find support points and enter the stock by checking the stock price charts in the short term, after the growth of a certain percentage of the stock, they sell it and enter another market.
Oscillation using the prevailing atmosphere in the stock market
Sometimes the release of a news causes a mass growth of stocks. This may be a rumor, but at this time, professional swingers buy stocks and sell them at the right time. Keep in mind that rumors and such news usually happen when the market is in favorable conditions.
Skill and experience
Professional swingers know when to enter and when to exit stocks with the help of chart reading skills. OTC shares are the best choice for volatility. This stock does not need a base volume for maximum growth in one day, and it is affected by the market atmosphere sooner.
Swingers do not invest small amounts. 5 to 10% interest is economical when the fee is not high. As a result, the oscillator does not have a capital limit, large capital in a short period of time brings the best returns for the oscillator.
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Supply and Demand
Stock prices are based on supply and demand. For example, when the demand for a share is strong enough to overcome the supply or the seller, the share price will grow, but when the power of the seller is greater and the supply is greater than the demand, the share price will fall. Therefore, by knowing the amount of supply and demand, the chances of swingers are much higher.
The best market mode to swing
The market has three states: bullish, bearish and neutral. It is better to buy and hold when the market is bullish. In the bearish mode, the best thing to do is to be an observer, wait until the market begins to rise, then buy. But the best time to swing is the neutral mode, because you can buy shares at a low price and after a short period of time make enough profit.
Disadvantages of fluctuations in the stock market
Create a bubble in the stock market
A bubble is formed when the gap between the price of a stock and its intrinsic value increases. A large increase in volatility in the market causes a price bubble.
In addition to the fact that the swing method requires a lot of capital, fees and taxes can also have a large effect on the cost increase. Of course, taxes and fees do not cost much, but by repeating this process in the long term, it can bring significant costs.
Volatility in the stock market imposes more stress on volatile people. In such a way that people have to make important decisions in a limited period of time, which imposes a lot of pressure and stress on them. But with careful planning, the stress of these decisions can be greatly reduced.
Time commitment is another problem of fluctuation. For example, if the oscillator enters a trade from 12 o’clock at night, it must check the market minute by minute. Therefore, it is a problem for those who do not have the necessary time.
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It is better to decide to choose a trading method according to individual limitations. Each method has negative and positive aspects. Oscillating in a short time, despite high stress, also has high excitement. But volatility is a complicated method that has a significant cost. Stress and creating a price bubble are other negative points of this method. It is recommended that you gain enough skill to swing to use this method first.