What is Swing Trading?
Swing Trading is a technique that spotlights on taking Small gains in shorter time span and taking stop loss quickly if trade is not in favor. The profits may be less, but when we do this on consistent basis it will give good return at the year end. Swing Trading positions are normally held a couple of days to two or three weeks, however can be held longer.
Swing Trading Strategy
How about we start with the basic of a swing trading system. Instead of focusing on 20% to 25% benefits on a single stocks, Swing trading objective is more advance, we focus on 3% to 5 % within 5-7 days, even in a choppy market.
Those sorts of profits probably won’t appear to be the ground breaking prizes in the stock market, but after a span time it accumulates to a handsome amount.
The swing trader’s focus isn’t on gains developing over weeks or months; the average length of a trade is more like 5 to 10 days. In this way, you can make a lot of small wins, which will add up to big overall returns. If you are happy with a 20% gain over a month or more, 5% to 10% gains every week or two can add up to significant profits.
The swing trader never focuses on holding stocks for weeks or months for big gain, they only deal in maximum 7 to 10 days trading pattern. By doing this they earn a lot of small gains, which will gradually convert in a huge amount latterly. I personally recommend Swing Trading over Positional trading, as I believe in small profits in a less time frame rather to wait for a longer time.
Of course, there are chances to make losses, we in swing trading strategy focus on small losses also. if you keep your losses small then only you can multiply your fund by small gains. Rather than the normal 7% to 8% stop loss, take losses quicker at a maximum of 2% to 3%. You should keep 3:1 ration in Profit: Loss, this is the best Portfolio Management. And this is the only rule for successful trading.
Swing trading many times delivers larger gains on individual trades. A stock may go in strong bullish zone after breaking a certain level and which may convert into a huge profit, at this stage, I personally recommend you to trail your stop loss order, that means you should modify your loss cutting bid to your cost price. For Daily update on Swing trading Stock tips for free stay tuned to Financialmatters.in