What is Swing Trading?

 

An Introduction to Swing Trading for Beginners.

If you are new to trading, you will have probably come across all the different trading terminology and might feel a little overwhelmed.

As a novice trader, you will be researching and learning about the different types of trading including ‘day trading’ and swing trading and finding out whether trading is for you.

Traders come from all walks of life and have individual, various commitments. It’s essential to find a trading style that fits around your current work and life responsibilities. Our students come from various backgrounds, some work full-time, others are stay-at-home parents, but they all manage to fit trading into their schedules because they have chosen a style that suits them.

Swing Trading Explained

Swing Trading or Day Trading

Swing trading is a type of financial trading where trades are held for a medium-long period of time ranging from overnight, a few days to a few weeks.

On the other hand, ‘day trading’ is where you open and close a trade in a single trading day before the markets close. Choosing whether you want to ‘day trade’ or ‘swing trade’ can be dependent on whether you are able to trade all day or have to fit it around your other responsibilities.

Consider your personality and mindset too when choosing a trading style. Some complete beginners may find the fast-paced nature of day trading too intimidating at first; patience is necessary when swing trading, as stocks tend to be held for a longer period of time.

Swing Trading Commitment

If you work full time or have limited time, swing trading is for you because it doesn’t require you to be at your screens all day. Many of our students work full-time jobs and swing trade in the evenings. At Trading College, we hold a ‘Swing Club’ webinar on Monday nights. The aim of this webinar is to expose students to live swing trading with a professional trader and set up trades. On Wednesday evenings, we hold a ‘Q & A’ Session and this is a chance for our students to ask questions about these trades.  This is perfect for those who want to swing trade and it is part of our Pro-Trader and Mentorship Programmes. 

How Does Swing Trading Work?

Swing traders hold onto a trade for a longer period in comparison to ‘day’ and ‘intra-day’ traders; this is to anticipate a larger price move, and therefore increase your potential to earn higher profits. Swing traders base their decisions on technical analysis and price action and this can bring in a great deal of profits. Technical analysis is used to analyse price trends and patterns and look for trades and short-term price momentum. With swing trading, it is assumed that there will be a larger price range and price movement. Swing trading can carry more risk due to trades being open overnight, therefore usually it is best to place smaller trades (have your position size smaller) to reduce your risk.

How to Start Swing Trading?

Where Do I Begin?

Firstly, you will need to learn how to use technical analysis and read your charts. You can learn more about it here. Next, you should learn to understand your time frames in your charts. Once you have gathered an understanding of this, you will be looking at indicators and how to use them to read your charts.

Finally, you will move on to risk management, position sizing and should learn how to identify a market trend. Once you have a further understanding of swing trading, you will be looking at what strategy to use. Ensure you pick a strategy and stick to it to see consistent results; do not move onto your next strategy until you have fully understood and implemented your current strategy and seen profits.  

Have we gone into unknown territory now? We are here to help!

As with any type of trading, patience is a virtue. It is essential that you do not go in blindly but that you receive a good trading education to help you set realistic expectations and goals.

If you would like to learn how to swing trade and be in a community of traders who will be able to support you, take a look at our Swing Trading Course or our Pro-Trader Programme.