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Swing Trading Strategies

October 4th, 2010 by admin Leave a reply »

Many people that are interested in trading the stock market hope to replace some, if not all of their income. If your intention is to swing trade as your primary source of income, it’s most likely going to take a good amount of time before you can do it consistently. Do not go into swing trading thinking that a few weeks of practice is going to be enough to get you there. Be prepared to spend months or years learning and getting experience by trading before you can even think about quitting your job to trade full time.

Full time swing traders spend many hours a day, during trading hours and after to research their upcoming trades. People that do it full time also handle pressure very well, so if you don’t, then you may want to reconsider your intentions. Many people come to find out that they cannot handle the stress involved with trading as a full time job. When swing trading becomes your sole source of income, it can cause enormous pressure to consistently bring in money. You may also let your emotions get the best of you after a string of losses and gamble your money on trades that are not well thought out. This cuts short a lot of new traders futures. When you have a string of losses, the best thing to do is stop and evaluate what went wrong, not immediately trade more to try and right the situation.

To be good at swing trading, you do not have to be a genius or have a crazy high IQ; you just have to have self control. You have to have practice constraint, discipline and self calm. You must remain unemotional during all times, especially during loss. When a trade doesn’t go your way, do not try to make the situation right, just look for your next trading opportunity and move on. This is what separates the successful and the unsuccessful traders.

Once you get started swing trading on a full time basis, if you have good profit over a few months, don’t take that as a sign that you can quit your day job. There are ups and downs and you need to make sure you are trading with enough that you can support yourself. If you have monthly expenses of $6000, you cannot expect to make that much trading with $30,000. That would be a nearly 15% gain each month, which is not going to be consistently hit. Some of the best traders in the world only averaged 20%-25% a year over 25 years.

Most swing traders are in the market to add supplemental income or to improve the worth of their investments. This is far less stressful as you are not relying on the profits to live and pay expenses. If you make a mistake or have a string of losses, it won’t put you in a really bad position and you can just move on and learn from the mistakes. Part time swing traders usually do their analysis after they are off work and after market hours. They do their research and plan their trades for the next day.

It takes a lot of time and experience before you can be at a place where swing trading can replace a significant amount of your income, or all of it. You have to have a lot of capital and be able to control your emotions when it comes to trading. If this is your goal, get started slowly learning the stock market and practicing trades and one day you will be ready to take the plunge.