All You Need to Know About Swing Trading Investment Strategies
The Rush of financial Markets
Growing up, you often hear about how exciting certain fields of work can be â€“ such as becoming a doctor, or a pilot. Itâ€™s unfortunate that the term stocks have become something of a stigma because you would never hear people in their teens gushing about how exciting trading stocks would be. In truth, there are few things as exciting (or as risky) as trading stock. In the modern age, this trend continues because trading makes the world go round. However, alongside the physical trade of stocks we now have virtual trading (such as FOREX).
Needless to say, Iâ€™ll spare the details as we will be talking all about swing trading strategies. Swing trading is a form of online trading (though some traditional forms of trading use the same tactic) that captures results and gains generally within the span of a few days. For this to be possible the trader needs to depend on quick choices â€“ after all, the reason why it is called swing trading is mainly because the trader goes with the trading flow in the short run, swinging like a pendulum as it rides on the momentum of the stocks.
What are the advantages/disadvantages of swing trading?
Its biggest advantage ironically enough, is also its biggest disadvantage which lies in the nature of the trade. Swing traders have no time to spare, so long-term investing is out of the picture. This means that traders who often have trouble predicting outcomes over extended periods are better off trading stock as quickly as possible and quickly hopping to the next one.
On the other hand, due to the lack of long-term predictions swing traders are forced to rely on quick trades which can get reasonably hectic (and sometimes unpredictable). While experienced swing traders can predict and ride out trades in the daily charts just fine, this constant swing of momentum can be quite the chore for the ill-prepared.
Are there any strategies for successful swing trading?
Just like any other type of online trading thatâ€™s had enough time to go through an extensive process of trial and error, there are indeed some very viable strategies for successful swing trading. This includes:
- Going with the flow of trends â€“ Taking advantage of swing trading means learning to embrace all the trends you come across, and keeping note of all of them in case you come across the same trade again. While this might seem like an obvious strategy, it is the foundation of swing trading.
- Japanese candlesticks work extremely well â€“ While there is nothing wrong with those who use the traditional type of bar charts for their online trading, the Japanese candlestick charts come in very handy for swing trading. It becomes incredibly easy to identify the buying or the selling pressure which will prove instrumental for short-run investments.
- Trial and error is your friend â€“ Many people often become discouraged after losing out on their trade one too many times, and this is understandable with long term investments. However, swing trading is all about getting used to the flow â€“ this kind of high speed trading is bound to have some speed bumps. Learn from your mistakes and move on, because the knowledge you gain is invaluable.
- Working against the trends â€“ Just as you learn to embrace trends during swing trading, you will also eventually learn when to counter-trend. Always keep your eyes and ears open for opportunities to take advantage of either the uptrend or the downtrend.
- Technical analysis still works wonders â€“ Last but not least, while you do not have to worry about full-blown predictions over large trade movements, technical analysis is still incredibly important. However small the trade, you still need to make a prediction â€“ albeit a quick one. Always be prepared.
Swing traders thrive off of quick movements in the trading industry. This is due to their ability to exploit the system in ways that larger institutions are unable to do so because of the considerably larger sizes of their trades. However when it all boils down to it, being a good trader in general requires some patience and the willingness to take a few risks based on intelligent analysis. No matter what kind of trade you prefer, that is something that will never change.