What Is Swing Trading: Returns, Benefits, Guide, & Top 10


Swing trading is a concept in stock trading that can be good to know. Therefore, today I will go through what it is, a few different methods and much more that you need to know about swing trading.

So, what is Swing Trading?

Swing trading is a popular way to trade on the stock exchange. In short, it means buying and selling shares or other securities on a varying time horizon – and you usually keep your investment for a few days up to a couple of weeks.

It is thus a relatively short-term trade you engage in, and in a way it is similar to day trading. The big difference, however, is that in swing trading, you keep the investments longer than 1 day, which you do not do in day trading.

For whom is swing trading suitable?

Swing trading is suitable for almost everyone, both beginners and experts in the stock market.

The big advantage of this method of trading is that you can keep your regular job. Swing trading can become a hobby that you do in your spare time.

Often, not much more than 15-20 minutes of work is needed each day to keep track of your investments.

Another reason why it is suitable for beginners is that you can start with small sums and slowly work your way up.

So you do not need large capital to get started and since the sums are small, the risk will also be smaller.

This is one of the big reasons why swing trading has become really popular.

What are the benefits of swing trading?

There are several benefits to using swing trading.

1. The strategy is suitable for beginners

If you are new to the field and want to start trading, this is a great way to get started. Swing trading is less stressful and slightly easier than day trading because you do not have to buy and sell very quickly.

These are slightly longer positions, and therefore this is a strategy that is best suited for most beginners.

It is important to point out that you can of course use swing trading even if you are experienced in the field, and there are many experienced investors who prefer swing trading over day trading.

2. It requires less time

Swing trading is a very time-efficient way to trade compared to day trading.

You do not have to sit glued in front of the computer screen all day to follow the development of your investments.

The idea is to buy into an advantageous position, and then focus on following the movements that take place over a few days up to a couple of weeks.

In the meantime, you can study in the field to become a better trader, find new potential investments, read books, or whatever it is you want to do.

In short, swing trading gives you more freedom and requires less time on the screen.

3. Slow but stable

Swing trading rarely means any quick gains – instead, you usually build up your capital over a slightly longer period of time.

And this is something that is suitable for those who are not so used to trading or investing in general.

This can also lead to a higher return as shares rarely develop very strongly in a single day.

But in the slightly longer term, there is better potential for a higher return in general.

What are the disadvantages of swing trading?

All investment and trading strategies have disadvantages, and so does swing trading.

1. Not as up to date on the market

If you have swing trading as a trading strategy, it probably means that you do not sit in front of the computer screen all day every day, which in turn means that you are not as up to date compared to someone who runs day trading.

This means that you, for example, can miss declines and not have time to sell before, or miss out on good buying opportunities.

While you are not sitting in front of the computer screen, there can be very good opportunities to both buy and sell that you simply can not take advantage of.

2. You can lose large sums

Swingtrading can help you achieve a high return, but it is also quite possible to lose large sums on it – just like with most strategies. No strategy is perfect.

However, there are ways to limit their losses.

On the one hand, you can invest smaller sums in each individual investment so that you spread the risks, but you can also use a stop loss that automatically sells your holding at a certain level so that you limit the downside.

3. It is important to know technical analysis

Technical analysis (TA) is a central part of swing trading (and day trading), and therefore it is incredibly important that you keep track of how you use it.

You can of course also use fundamental analysis (FA), and combine these two, but mainly it is TA that applies in the slightly shorter term.

Once you understand how TA works, it is very useful, but it can have a high learning curve that you need to get past first.

In other words, it can take some time before you become good at it, and before that there is the risk of making a few (big) mistakes.

I therefore recommend that you start with a slightly smaller amount before you understand how to use technical analysis and have found a trading strategy that suits you well.

This will allow you to limit your losses.

Here’s how to get started with Swing trading Today & How to Succeed

You have probably seen different price graphs in the stock market, oil, gold and currencies and thought it must be possible to make money on? It makes it!

The vast majority of swing traders analyze the market technically.

This means that they study a course graph to find opportunities to buy or sell a product.

There are also other methods such as studying how other actors act, shopping for news or analyzing something fundamental.

Fundamental analysis means that you try to evaluate the actual value of products.

Important factors when you, for example, value a share fundamentally are profit, equity, margins and development.

It is important to find a method of trading that you feel works for you and that is of course profitable. It is often said that every trader has his own method.

No method just gives profit trades. It is therefore important to have a good plan for managing and minimizing losses.

1. Open an account with an online broker

It is important to trade through a good broker.

They should offer good products to trade in. For example, you want to be able to make money both from a product going up and down in price.

You also want the broker to be open for trading when the market is open.

Currencies and many commodities are traded around the clock Monday to Friday.

2. Transfer money that you can afford to lose

It is important to remember that short-term trading is associated with high risk.

Many people lose money and give up early. With a well-thought-out strategy, good risk management and patience, it is possible to master the financial markets.

Start trading with some money. As you become more skilled, you can trade with larger amounts.

Once you have opened an account with your broker of choice, you can start by transferring a small amount that you can start training with.

Feel free to test yourself on their demo account (if they have such a thing) to see how their trading platform works.

3. Test yourself carefully with smaller positions

It is important that you learn all aspects of trading from the beginning.

This is, for example, how the trading platform, position sizes, take profit and stop loss etc. work.

You need to have a strategy to minimize your losses. Many traders usually risk about 1% of the trading account’s value on each trade.

Be careful and choose a level that suits you. Of course, it is also important that you feel that your strategy works and is profitable.

It is good to keep a diary of your trading.

Write down all the trades you do, what went as you intended and what did not. Learn from your mistakes and refine your trading plan.

When you feel secure in your trading, you can trade with greater capital.

4. Never stop educating yourself – keep up the constant development

Even if you are confident in your trading plan and strategy, it is important to continue to improve.

You can hone your plan so that your loss-making trades will be a little less and your profit trades a little bigger.

It makes a big difference in the long run. But there are also other things that are important to improve as a trader.

There are few activities that are as personal and mentally developing as trading. Both making a profit and losing money evoke emotions that you have to deal with. The most basic thing in trading is to follow your plan.

It may sound simple but is probably so difficult when the market moves a lot. If you learn to control your emotions and trade disciplined, you have a great opportunity to become a successful trader.

Swingtrading strategies

When you are engaged in swing trading, you need something called an edge, which is the same as a swing trading strategy.

Compared to the competition, a clear edge is one of the best things you can get.

In swing trading, you should place an order in the evening or early morning before the stock exchange has time to open.

This is another difference from day trading, where you end your trades before the end of the day.

This means that the flexibility is greater in swing trading because you can make your investments in principle whenever you want around the clock.

To determine how much start-up money you have to move around with, you can find out the size of your stockbroker’s commission.

You do not want any profits to be eaten up by various overheads, such as fees to stockbrokers for example!

It is also very important to invest only money that you can afford to lose, which not only protects against financial ruin but also eliminates the risk of emotions controlling your trading.

Conclusion

What return can swing trading give?

At the beginning of your career as a swing trader, you will in all likelihood make a loss – at least for a period of time.

Being completely free from losses is almost impossible, but you will minimize the losses over time and you will also be able to make a lot of money. If you give it time, that is.

There are really no limits to how much money you can make on swing trading, if you trade indexes and stocks with leverage, your profit or loss will be greater.

It’s mostly about how quickly and efficiently you can identify which opportunities are suitable for buying and selling, as well as which shares are worth investing in.

Here, a serious stockbroker in combination with knowledge and sustainable strategies can be quite important aspects to take. regards to.

By investing money that you can afford to lose, you can keep your emotions out when you are in a bad period.

Expecting a return of between 10 – 30% is a reasonable long-term expectation, but then you need to have a strategy (an edge) that works.

Eventually, you will in all probability reach an average return of around 20% per year, although it will take a very long time.

And time must be allowed to take, never forget it.

Sources

https://books.google.se/books?hl=en&lr=&id=vRuWAAAAQBAJ&oi=fnd&pg=PA1&dq=Swing+Trading&ots=1I8A5L6Jdn&sig=xSTE_GHFl1RMx4kpddfLXHTh0cE&redir_esc=y#v=onepage&q=Swing%20Trading&f=false

https://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.464.7360&rep=rep1&type=pdf

https://books.google.se/books?hl=en&lr=&id=wRHdCQAAQBAJ&oi=fnd&pg=PA1&dq=Swing+Trading&ots=gg7NypoLo1&sig=IOIW_C95oGbenJheNfbyB2_tVmY&redir_esc=y#v=onepage&q=Swing%20Trading&f=false

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https://books.google.se/books?hl=en&lr=&id=JNuMaWMHDxUC&oi=fnd&pg=PR7&dq=Swing+Trading&ots=nKrQYtd6xs&sig=HANMU-NCwuCfUMrMDKQ5Z3OQJ3I&redir_esc=y#v=onepage&q=Swing%20Trading&f=false

Kevin

This article has been reviewed by our editorial board and has been approved for publication in accordance with our editorial policies.

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