What does swing mean in stocks? – Swing Trade Chart Setup

It is a term that has become associated with the stock market. It refers to the percentage increase or decrease that a stock’s price makes during any set period of time, usually in an uptrend. You can think of it as the difference between the stock’s closing price and the price it achieved during a period of time and will therefore be called the swing. (Example)

Examples of Stock Swings

Example of the stock surge – Apple (AAPL) reached over $200 per share in March 1995 which helped its share price spike.

Example of the stock dip – In June of 1985 Apple fell to a low price of 15 cents per share. The stock then jumped back to over 20 cents per share and it was on par with the original peak of $18. In the next year many people jumped on the bandwagon. In March of 1991 Apple was up to $50 per share, then at $100, then $200 in 1991 and $250 in 1992, and in March of 1993 it rose to $270 per share which was $10 higher than the original peak price!

Another example of a swing is the surge of $27.4 billion in December 2000. It was a spike in a market that was recovering from the dot-com crash after a long period of losses. And in March of 2002, stocks soared to over $300 per share, reaching $500 in February of 2003.

For more information about trading stocks, read the Trading Basics article on Stock Trading and Tips on Trading.

How much does a stock move when it reaches a swing?

For a stock to climb or fall to a particular high or low, the market has to be oversold. If there are no more buyers, the stock goes back down, or if there is still a shortage of buyers, the stock goes up in price. There is a rule of thumb that the stock will go up $1 for every $100 of sell orders filled. This rule of thumb is usually referred to as the “rule of 123” to differentiate it from the “rule of 123” used for stock charts. The rule of 123 refers to the following:

At the upper limit – there are no sellers. Sellers fill up the order and take the stock up to $1.00. At the lower limit – there is a shortage of buyers. Sellers fill up the order while they wait for more buys. By the time the sell orders hit the market, the stock has surged back

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