[2][3] Momentum signals (e.g., 52-week high/low) have been shown to be used by financial analysts in their buy and sell recommendations that can be applied in swing trading.
[5] Trading algorithms/systems may lose their profit potential when they obtain enough of a mass following to curtail their effectiveness: "Now it's an arms race.
Everyone is building more sophisticated algorithms, and the more competition exists, the smaller the profits," observes Andrew Lo, the Director of the Laboratory For Financial Engineering, for the Massachusetts Institute of Technology.
However, swing traders do not need perfect timing—to buy at the bottom and sell at the top of price oscillations—to make a profit.
Small consistent earnings that involve strict money management rules can compound returns over time.