A swing low is one (or, more often, more than one) low that changes from the initial low to the final high within a relatively short, but tight, window of trading time. The purpose of this trade order is for the trader to create a favorable market price for the company’s stock (or securities) by selling high and buying low, in a manner that makes the stock more likely to fall when the trade ends.
When do stock market trades occur?
Trading stocks generally occurs during and after the opening and closing trades of most major stock exchanges. However, there may be some time before a stock trading session commences or an exit at which trading takes place. A “market-based trading window” provides a window of time in which stock trading can occur. To maximize market efficiency, trading firms typically start trading on a trading floor before the expiration of such a trading window. As soon as the opening or closing window is over, a new and opening trade window opens, allowing traders a new window of opportunity before the expiration of the remaining trading window and a new, closing window.
What is the difference between a swing low and low?
Unlike many other terms used to describe the price of stock, swing low and low are often more specific and descriptive than their generic equivalents. The difference between low and swing low can be illustrated by comparing the prices of two different securities, each with a low and then an eventual swing low price of $100. Consider the prices for these two securities at a price of $100:
Low Swing Low (10 bps) $0.01 Low Swing Low (15 bps) $0.02 $100 $100 $100 $100 $100 $100
It’s easy to see that the swing low for the $100 stock is $100, and that the swing low for both stock and all other securities in that market is $100 because neither can change to any higher price in less than a ten-baud window. Thus, while both swing low and low are the lowest prices in a market, the difference between the two is that a swing low is a price for a single security that lasts for one period of time (10 minutes) or one full trading day (15 minutes). The difference between a swing low and low is that a swing low is a price that’s low, while a low is a price that’s low for a time or for any period of time.
Where to find the Swing Low and Low
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