5 Advantages of Swing Trading

Swing Trading Tips and Advantages

Swing trading has 5 key advantages that can lead to higher returns in less time.

Swing trading is a successful method of stock trading that is often used by traders who make a weekly or monthly living on their investing. It is considered a near or medium term investment because it is a trade that either makes or breaks itself usually in two to thirty days. It is not the type of trade that long term investors would be interested in. (Camarilla 2013) “Swing Trading attempts to combine the best of two worlds – the slow pace of investing and the rapid potential gains of day trading.” (Page 1)

So what is the definition of swing trading? It is accomplished through the analysis of stock data. It seeks to identify a current stock or security that is rising in price quickly and looks to do so for a short period of time. A swing trader purchases the rising stock, rides the wave of increasing value, and then gets out before the market corrects and the price quickly drops back down. And that is the trick of swing trading; identifying when to get in and then when to get out to generate the greatest profit.

(Forex Guy 2014) “Swing trading is a type of methodology that sits in a ‘sweet spot’ between the caffeine fuelled day trader, and the ‘buy and hold’ position trader. Swing trading is a medium term approach to the market centered around momentum trading. When you’re swing trading, you let your trades run and think on a bigger scale in terms of profit.” (Page 1)



Narrow Focus

Swing trading is very technical in nature and based largely upon looking for very short term trends where stocks increase in value quickly. According to the Forex Guy (2014), “Swing trading time frames allow you to focus on the core market movement and identify trend momentum easily. It only takes a couple of seconds to get your bias on a swing trading time frame”. (Page 1) You do not have to get into a wide variety of data areas such as company balance sheets and other things in order to get the needed information to make a trade. This more narrow focus helps you concentrate on a few key areas that you will become very good at. It’s all about just the price and trends when swing trading. This fact also tends to make swing trading a lot less stressful than other short term trading styles such as Day Trading.

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  Know your Results quickly

As was stated, swing trading usually involves trades that are over with in just a few days up until a month. You will know how successful your strategy has been often times in less than a week. This gives you the ability to be able to constantly tweak your swing trading strategy until you have it to the point where it is constantly earning you money.

Can Generate Monthly Income

Since you do not have to sit around for months and years, such as long term investing, you will know how much money you have made on your trades and how much of that you can take out of your investment account as income. You can maximize the amount you earn from doing as little as three to five trades per week that typically are realized and finished in less than ten days.

Saves Time

It is the type of trading that does not have to be constantly monitored so it is good for investors who do not have a lot of time, such as those who trade on a part time basis while holding down another full time job. Once a person has become proficient at technical analysis, again in line with the narrow focus of things you are looking at about a stock, it does not take a lot of time to identify the key trends and make your trades.

Risk Control

Perhaps the most significant advantage of swing trading is its ability to minimize risk. According to Lewis (2011), “Stop losses are typically smaller than longer term trades. This allows for you to place larger sized positions instead of extremely low leveraged ones via the longer-term trends.” (Page 1) Another factor in the reduction of risk is you are generally making only three to five trades in a week so you do not have this broad spectrum of investments to check on; it allows you to keep very close track on your trades requiring only a short amount of time.



Camarilla (2013). Surefire Thing. Swing Trading. Retrieved August 18, 2014 from http://www.surefirething.com/swing-trading.html

Forex Guy (2014). SWING TRADING: AN ANTIDOTE FOR FRUSTRATED TRADERS. Retrieved August 18, 2014 from http://www.theforexguy.com/forex-swing-trading-strategies/

Financial Web. Pros and Cons of Swing Trading. Retrieved August 18, 2014 from http://www.finweb.com/investing/pros-and-cons-of-swing-trading.html#axzz3AtUWvHpK

Karpel, Vlad (May 2013) Tradespoon. Which Strategy Suits You: Day Trading Or Swing Trading. Retrieved August 18, 2014 from http://www.tradespoon.com/blog/which-strategy-suits-you-day-trading-or-swing-trading/

Lewis, Christopher (June 2011). Daily Forex. Swing Trading: Advantages and Disadvantages. Retrieved August 18, 2014 from http://www.dailyforex.com/forex-articles/2011/06/Swing-Trading-Advantages-and-Disadvantages/8182?ab=fxamb1&utm_expid=3673405-3.Srt7y3QJQ6atzdfM5cbOIg.1&utm_referrer=https%3A%2F%2Fwww.google.com%2F

Billy Williams

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