4 Things You Should Know About Swing Trading


As an investor in the stock market, your primary aim is to meet maximum profits while minimizing risks. However, the dream of winning big can be rarely or frequently hampered by losses, depending on the market trends. With online trading, you achieve small profits while circumventing losses. The little profits, if consistently accumulated over time amounts to significant gains.

Currently, there is a wealth of online resources on swing trading. The resources, coupled up with tools, and platforms that support this type of trading is progressively attracting many investors. Key factors to note about swing trading include:

  1. Swing trading makes a perfect way to ease into trading

Generally, this type of trading doesn’t require spontaneous decision-making approaches compared to other types of trading. Rather, this particular type of trading has easy to grasp and implement strategies. Swing trading doesn’t focus so much into the intrinsic value of the stocks an investor wants to trade. Instead, it capitalizes on time, and the market shifts likely to occur within the given time.

Since swing trading captures short-term trends of stocks, it makes a perfect choice for a part-time trader. For instance, unlike day trading which requires an investor to open and close trade within the same day, swing trading proffers a holding time of between three to seven days.

2. Recognizing price action is a critical aspect of this type of trade

The art of understanding the shift in prices of stocks is what can make you a success. To gain significant returns on investments over time, you have to master how to identify when prices are stagnating, recognize when prices are rising, and be cautious to note when the patterns are plummeting.

A series of actions associated with good interpretation of the market structure include pre-market analysis and market overview in search of potential trades. Finally, watchlisting prospective stocks pre, during, and post market hours is also a good strategy. It is advisable that decision making is made during the pre-market hours while awaiting execution during the marketing hours is best. The decisions effectiveness can then be reviewed during postmarketing hours for necessary refurbishment.

3. Most concepts that apply to other forms of trading equally apply to swing trading

Despite being a different mechanism of trading, swing trading still holds most principles applied in other types of trading. Therefore, do not be too biased on learning the different patterns only associated with with one way of trading. The more you know, the better you will become.

As a futuristic trader, go beyond learning how the candlesticks work and make the extra effort of familiarizing yourself with the fundamentals that steer the market in general. Learn useful trading indicators, and much more, after that, apply all the relevant concepts to whatever trading venture you choose for better results.

4. Over analysis of market events can make a bad swing trader

Finally, since swing trading is not focused on the intrinsic value of a given stock, do not be caught up into the insignificant details. For instance, several shares from a given industry simultaneously gaining value is a good enough indicator that investors are pumping money into the industry. Any further analysis of such a scenario can lead to delayed action hence limited gains.