Swing trading is quite an interesting trading strategy, despite some traders questioning its ability to result in significant winnings. When we looked deeper into the subject, we understood where they are coming from. However, we also noticed that when the strategy is used up to its full potential, you’ll be impressed by how much earnings a trader can end up with.
To help out, we’ve put together a quick guide that can help you out, if you happen to be interested in depending on swing trading to build your metaphorical… or literal, empire.
1. It’s All About the Short Game
What distinguishes a swing trader from other types of stock traders is their focus on small earnings. Of course, this doesn’t mean that they don’t win big; it just means that they don’t win big from a single trade. If you want to succeed as a swing trader, you need to shed the mentality of seeking a big payoff. You need to start focusing on the little wins you can get on a short term basis; we’re talking about a maximum of 10% profit over the period of a week or so. Making the change in your way of thinking is not easy at first, but with a bit of practice, you’ll get there, so don’t worry.
2. Focus on Quality
Since you’ll be aiming to make a small percentage of profit over a small time period, you need to consider the importance of reducing losses as well as making strong earnings. You can do that by investing in stocks with relatively low prices when compared to their growth rate. Now, keep in mind that there is a lot to learn about swing trading strategies, but there are basic principles. Since you will be sticking with the stocks for about 10 days, you need to pay attention to the trends; but, unlike day trading and long-term investors, it is recommended that you focus more on weekly data. If you would like to find out more about online stock trading, a company similar to SoFi has investment information for you.
3. Know How to Recover
Trading is risky; especially in swing trading, since you sit on your stocks for a while before selling. Sure, day traders suffer from bad trades, too. However, you must remember that the longer you sit on your stock the higher the stakes become; more specifically when you sit on them overnight. So, if you happen to suffer some losses; which you will, you need to be able to act swiftly. It is important that you compose yourself, as well as, recognize loss trends early on, and finally, take precautions; diversifying your portfolio, for example.
As you can see, swing trading isn’t such a hard process. In fact, you can make a significant amount of money from swing trading; that’s if you do it right. As any stock trading expert would say, patience is key. If you take the time to compile sufficient data, and to go through these data carefully while plotting your own trends, you are guaranteed to produce results. With this in mind, go ahead; take your entrepreneurial spirit and put it to the test. Good Luck!