Swing Trading till now is one of the most popular trading strategies which has its own pros and cons. Before you start to trade abruptly without knowing what swing trading is, sit back for some time and go through the basics to know what swing trading exactly means.
WHAT IS SWING TRADING?
Swing Trading is the short-term trading method (not as short as day trading ) used to trade stocks and options. The time duration of a single trade may last up to 2-6 days and sometimes it might even extend up to a couple of weeks. Trades are performed based on the market trends where traders yield profits from the price fluctuations. Swing Traders are completely different from day traders where a day trader holds his position only for a few hours. A Swing Trader should have sound knowledge & market analysis skills if he wants to be anywhere near success. Here are 5 pros of swing trading which can help you to understand swing trading better.
YOU NEED NOT SWING TRADE 24/7
Any trader who has sufficient investment and adequate market knowledge can try swing trading. Since this type of trading is something where the positions will remain open for a number of days, there is no need to constantly monitor the markets. Swing trading can be done as and when needed and the trader can take full control of his trading career as well as his main source of income.
SWING TRADING CAN YIELD GOOD PROFITS
You should understand the fact that longer time frames will result in fewer execution of trades, but they possess a high success ratio and incur lower transaction costs. This example, shows how swing trading works. Consider buying an instrument for a certain price and you wait for the price to rise. Once when the trend changes and the price rises as expected, you sell the instrument and earn a fair amount of profit. Swing traders look for minute market movements and make use of them. The only thing that should be chosen right is the instrument, the time frame and of course the right brokerage.
YOU CAN AVOID STICKING ONTO TRADING SCREENS
Trades generally require time to work out and you cannot expect a dramatic change in the trend all of a sudden. Stop losses can be set to avoid huge losses. So, you need not stick onto your trading screens. A well-studied and executed trade will always yield profits.
ZERO STRESS
There is literally no need to be stressed out if you are a swing trader. With stop loss being set in place, you can very well carry on with what you do for a living. As told before, swing trading can be a very good trading strategy if you are capable enough to understand it and translate practices into actions.
SWING TRADING DOES NOT REQUIRE MUCH INVESTMENT
All you have to invest if you are going to swing trade are the minimal charges that every brokerage demands to start an account (which may vary with respect to every brokerage), a computer and a conventional trading platform which will be provided by the brokerage. As and when you trade more, you will get to learn more out of your experiences which will be useful for your future trades.
THE BOTTOM LINE
Swing Trading is just another trading strategy which has its own methodology and unique set of benefits. It is up to the personality of the trader to analyze and understand whether this strategy would be good enough to achieve his goals or not. Remember, there is no such strategy that can lead you to success unless and until you do the necessary groundwork by dedicating enough time and putting in sheer hard work.
