What is swing trading? Why do you think is it popular during unstable times on the market? This style of trading probably has potential, if it helps professionals to successfully complete transactions and take profits.
In the swing trading for dummies courses, you will learn that the concept of swing trading is relatively new in trading. George D. Taylor told about this style of trading, which is based on the use of price fluctuations for profit, in his book “The Taylor Trading Technique” in the ‘50s of the last century.
What is Swing Trading?
Swing trading is a trading type based on self-control, the purpose of which is to keep an open position for a certain period: from several hours to several days. The task of the trader is to get the maximum profit on price fluctuations, while making the minimum number of transactions.
What does swing trading look like in practice? Suppose a trader opened a position and holds it for a day, two, three, waiting for the perfect time when it will be possible to exit with a profit. There is another option: for two or three days when the price fluctuates, the trader would stand aside, holding a position, and wait for the moment to successfully close the deal.
What does swing trading require from those who want to master this style of stock trading besides taking swing trading courses to learn more about this type of trading and discover the best swing trading strategies? Among the main conditions are:
- endurance (self-control, patience);
- experience in conducting financial transactions;
- knowledge of technical analysis;
- risk management skills;
- analytic skills;
- ability to act flexibly.
It may seem to you that many of the requirements are familiar and if not, they can be easily learned in online swing trading courses, and you are right. Swing trading can be viewed as a transition to a new level of professionalism in stock trading, and yet this style will differ from day trading or position trading. You can choose it if you want to use the opportunity to make a profit when the chance arises. You should seriously consider swing trading when you do not have much time to trade during the day.
There is nothing perfect in this world; therefore, even swing trading is characterized by both the presence of advantages and disadvantages. The main nuances are presented in below:
Swing Trading Advantages:
- Does not cause much emotional stress because you will not be spending the whole day staring at the screen;
- The cost of effort, energy, time is minimal;
- A high potential of making profits that are much bigger than the amount you risk;
- Ability to rely on technical indicators, which allows to make better decisions and reduce the loss risks;
- Suitable for all markets.
Swing Trading Disadvantages:
- A risk of losing positions due to sudden trend reversal (can be decreased with stop orders);
- Not suitable for beginners because it requires practical experience in stock trading.
Swing Trading Strategies
Swing trading on Forex is not a trading strategy, as some believe. This is just a separate style or type of securities trading, just like day trading or position trading. The way you enter and exit a position, manage risk and trading capital will make up your swing trading strategy. Despite the fact that swing trading does not have a clearly defined trading strategy and can rely on various combinations of technical analysis and decision-making, there are several rules and tactics that you can use for swing trading stocks. These rules will look like this:
- The right moment to enter will be the one during which the movement will be going towards profit immediately after the opening of the transaction. If this does not happen, and the price goes towards a loss within 2-3 hours, then the transaction is closed manually at the earliest opportunity.
- A quick price jump towards profit can be fixed immediately, since you can then go back and profit from trading pullbacks after this sudden movement. Fast and low profit in swing trading can be a steppingstone to additional profits.
- All correctly opened trades are closed by stop loss or take profit orders.
- It makes sense to transfer to the next trading day only those transactions that are in profit. Positions at a loss must be closed on the same day.
- Positions opening at the moment of the market opening or significant trading sessions should be avoided. It is also recommended to close deals before the news that can reverse the current trend, as well as during a clear trend reversal.
- Swing trading eliminates the going against the trend, drawing out a losing position or averaging strategy. You must enter and exit if the situation has changed.
- You should not enter the market if there are doubts about the development of events in the medium term time frame.
For successful trading using these rules, it is recommended to use only the main currency pairs, the minimum leverage and no more than 2-3 instruments at a time. Cross rates and exotic instruments are not suitable for such trade. It is also advisable to trade in the direction of a positive swap.
You might also be interested in other different types of Forex swing trading strategies. These include trendline trading strategy, inside bar trading strategy, daily chart Forex swing trading strategy, floor trader method, etc. If you want to learn these and other strategies and techniques for trading stock, courses on swing trading will greatly hep you out here because they are led by experts, who share the exact details of the trading strategies they use for successful swing trading.
Intrigued and want to learn about the attractive style of stock trading in more detail or learn how to form your individual trading strategy based on swing trading? The best swing trading courses will teach you about swing trading techniques and swing trading strategies more in depth and give you a chance to test your strategies in practice.