Is Swing Trading Difficult?
Swing trading is a short-term trading technique. You make smaller profits, but as you buy and sell within a few days, you can multiply your gains into high profit over time. Swing trading involves more volatility and more substantial fees, but it can bring extremely high returns if you follow some simple rules.
Requirements to Begin Swing Trading
Requirements to start swing trading are low. You only need a brokerage account and capital. Moreover, that system can be effective in many markets. Swing trading may be an attractive system for beginners to start with.
To see returns within a couple of days, keep the new trader’s motivation levels high. Swing trading is short enough not to allow distraction as long-term trading could, and not as hectic as day trading. Because it involves moving in and out swiftly, it suits individual traders.
Useful Knowledge for Swing Trading
Swing trading requires technical analysis to find instruments with short-term price momentum and identify when to exit. It follows the principles of price action and trends. If entering trades tends to depend on the day’s trading activity. Managing trade and exiting should always be an exact science. Many swing traders use simple resistance levels, Fibonacci extensions, or price by volume.
A Routine for Successful Swing Trading
Discipline and planning can contribute to your success. Start your day before the opening bell, at 6 am EST. It will give you the time necessary to check on your existing positions and plan your trades. Observe the overall market by studying economic news or websites. There are 3 main things to watch:
- Is the global market bullish or bearish? How is inflation, the currency?
- What are the hot or growing sectors?
- Is there news about your current holdings (their actuality, earnings)?
How to Find Potential Trades for the Day
The goal is to find positions with a fundamental catalyst.
You can find exceptional opportunities like IPOs (initial public offerings), mergers, buyouts, takeovers by monitoring SEC filings, and sometimes headline news. These involve high risk but can be very rewarding if well played.
You can also find out which sectors are performing well by analyzing the news or consulting trustworthy financial websites. Once you identified the trend, buy at the opportune time and ride along until you notice signs of reversal.
A third option is to look into heavily traded stocks that are near a critical support or resistance level. Look for the patterns predicting breakouts, buy after a breakout, then sell shortly after at the next resistance level.
Tips From Professional Traders
- As a swing trader, your first objective should be to aim humble returns and keep the losses small.
- As soon as you found a viable and entered, start looking for an exit.
- Don’t sell at the top all the time. It is more profitable to sell too early and avoid market correction.
With a disciplined daily routine, proper planning and technical analysis, swing trading can be easy to master.