Swing trading requires discipline and substantial technical skills to earn profits in the stock and forex market. It is also one of the most common trading disciplines used. Analyzing the trends and possible patterns of the stocks is the main concern in swing trading. Also, swing traders utilize the sudden temporary price spikes in the market to their advantage.
Advantages of Swing Trading
- One of the best and most utilized ways of trading for beginners
- Great in maximizing profit
- Ideal to use in markets where the prices constantly change within short increments of time/li>
- Since it is between the duration of a day trade and a long term trade, possible losses would be close to minimum
- Swing trading has a fast pace and this method can let the trader collect profits faster, avoid large losses, and have a good look at which next economic sector will probably thrive
- More often than not, sole income from swing trading can sustain a trader’s lifestyle
- It is less tiring compared to other trading disciplines, like day trading, which require you to stick to your screens as much as needed to monitor the stock market
Disadvantages of Swing Trading
- Swing traders need to have good perception and technical knowledge, which usually take time to learn
- You risk to get whipsawed as the market is still unpredictable even if you have excellent perception and analysis
- Swing traders have less control of their investments than day traders
Verdict: Are You a Swing Trader?
Swing traders usually are individuals who avoid large risks, making them unable to produce larger profits. If you aspire to become a swing trader, you should realize that you are playing between the extremes. You neither invest too long nor too short. You need to base your investments on your technical analysis of the market trend. Compatible traders should learn how to play safe, be disciplined, and be consistent. They should religiously practice analysis of the behaviour of the stocks.
If you are ever planning to be a swing trader, remember to focus on your goal, which is to earn profit consistently. Do not be discouraged by others that earn much more profit than you do. Learn what’s working and what is not. From these practices, you can expand and earn more profit bit by bit consistently.
References
Reference 1: Some of the Points have been taken from http://en.wikipedia.org/wiki/Swing_trading
Reference 2: Special Thanks to Mr. Robert, an author and Forex expert from Mtrading.eg, on sharing his views in this article.
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