Alternative Investments: Tap into
High Risk Gains with Swing Trading

Of the various investment vehicles available today, alternative investments offer the highest risk and potential for reward. Specialized training and trading strategies are required for each type. Some items trade in very illiquid markets, requiring long periods for a sales transaction to take place or special-purpose auctions where high net-worth individuals are present. For the highly liquid items, swing trading is an excellent method for mitigating risk and capturing short term gains.

Alternative investments are at the upper portion of the risk pyramid detailed below and include real estate, collectibles, foreign currencies, commodities, options, and futures.

Each investment modality is unique in its nature, risk profile and trading strategy:

For the last four items, foreign currencies, commodities, options, and futures, there exist very liquid markets that trade actively on exchanges or large global networks.  Investors, trained in the art of profiting from trading these securities, typically use “swing trading” to achieve their investment goals and objectives.

alternative investments

Swing trading is a style of trading that seeks to realize gains in a stock, currency or commodity within one to four days.  Swing traders attempt to discern trends and patterns in pricing behavior, and then enter and exit the market with trades designed to capitalize on predictable market volatility.  Technical analysis is used to provide market insights, and momentum indicators assist in establishing appropriate entry and exit points.  The trader is not interested in the intrinsic value of the item traded, but is focused on profiting from both up and down price movements.  Consistency is the goal, since no predictive algorithm is infallible.  Since trade sizes tend to be small and liquid, the swing trader can move in and out of positions quickly, and does not have to compete with large institutions moving large lot sizes.

The risk profile for alternative investments is on the high end of the chart, and specialized training, typically from an industry professional, along with weeks of practice, is paramount to achieving success.  The risk and active trading style may not fit your personality type.  However, many investors have been drawn to these actively managed forms of investing and become skillful at the art of swing trading.  After you have obtained a firm foundation in all other aspects of general investing, you may wish to investigate these topics to determine if they appeal to your “inner trader” instinct.