All about swing trading?
Additionally, there are golden rules in the swing trading game. There is a 2% rule that says one should never put more than 2% of account equity at risk. On the other hand, there is a 1% rule that says the loss on a single trade should not exceed more than 1% of your total capital.
Additionally, there are golden rules in the swing trading game. There is a 2% rule that says one should never put more than 2% of account equity at risk. On the other hand, there is a 1% rule that says the loss on a single trade should not exceed more than 1% of your total capital.
Another of the most popular swing trading strategies involves the use of simple moving averages (SMAs). SMAs smooth out price data by calculating a constantly updating average price which can be taken over a range of specific time periods, or lengths.
The first key to successful swing trading is picking the right stocks. There are two key variables to consider when choosing the stocks to swing trade: liquidity and volatility. The best candidates are large-cap stocks, which are among the most actively traded stocks on the major exchanges.
Swing Trading Strategy
Rather than targeting 20% to 25% profits for most of your stocks, the profit goal is a more modest 10%, or even just 5% in tougher markets. Those types of gains might not seem to be the life-changing rewards typically sought in the stock market, but this is where the time factor comes in.
The optimal trade entry strategy in swing trading involves waiting for price to be above the red line and have made a swing high after a moving higher impulse. Swing trading can be profitable with careful entry and exit points, as shown by the example of a successful trade with a one-day hold.
The holding period for a typical swing trade falls somewhere between two days and two weeks. Of course, there are exceptions where some trades are held for longer periods of time – but we'll talk about that later on. For now, let's focus on the average holding period for a swing trade.
The average return of swing trading is said to be 10%. Of course, it is never possible for you to get these exact ures all the time. Although the overall performance depends on how you do your trades and how many trades you take part in. It can immensely help you achieve your monthly return easily.
Mark Minervini is a world-renowned stock trader who is famous for his impressive returns and uncanny ability to identify winning stocks. He strongly advocates swing trading, a strategy that involves holding stocks for a few days or weeks and taking advantage of short-term price movements.
However, if we were to give some sort of estimate, we would say that it's reasonable to expect somewhere between 10-40% annually, on average, provided that you trade with a sensible risk level. The returns year to year will vary a lot, with some years being exceptional, while others might just provide a small return.
Which time frame is best for swing trading?
Generally, the time frames for swing trading you want to use are the weekly, daily, 4-hour and 1-hour charts. Any time frame below 1-hour likely won't be of any use for a swing trader since trades on those time frames require a much more 'hands on' approach in terms of trade management.
- Relative strength index (RSI) ...
- Stochastic oscillator. ...
- Ease of movement (EOM) ...
- Bollinger bands. ...
- Fibonacci retracements. ...
- Support and resistance. ...
- OBV (On-Balance Volume) ...
- MACD (Moving Average Convergence Divergence)
| S.No. | Name | CMP Rs. |
|---|---|---|
| 1. | Ksolves India | 1258.45 |
| 2. | Nestle India | 2482.15 |
| 3. | P & G Hygiene | 17083.50 |
| 4. | Tips Industries | 408.55 |
Can you make a living swing trading, or is this just another case of “too good to be true”? This trading style is positioned between day trading and long-term investment and demands a strategic approach and a solid understanding of market trends. But, yes – you can absolutely get started swing trading for a living.
Types of Trading FAQs
Which trading is most profitable? If you choose the correct stocks to buy, intraday trading may be highly profitable as it compels you to purchase and sell equities on the same day, just before the market shuts.
Many people put in multiple years before breaking into consistent (or even any) profitability. It takes at least a year to consistently make money from day trading or swing trading, if working at it full-time or with a mentor, and only working one (maybe two) strategies. Six months is the quickest; most take longer.
The main reason 90% of swing traders don't make a profit from their efforts is that they don't take it seriously enough.
Disadvantages of Swing Trading
Though there is greater potential for larger returns, the opposite is also true. By holding onto your position overnight and even longer, your losses may accumulate if prices continue to move opposite of your early predictions.
Wrong position size or don't have a position sizing method. Taking too many correlated positions (increases risk…as the correlated trades are essentially the same). Got out of a position before the planned exit. Got out of a position later than planned.
With only 2% profit per month on average, a swing trader would make a 24% return in a year, which is higher than Warren Buffet's 20% per annum average return. Achieving success trading the stock market may seem like an easy thing, but what percentage of swing traders are really successful?
Can I swing trade with $50?
You can start trading with an initial investment as low as $50. However, the amount of money you start with is a significant determinant of your ultimate success and will influence your trading experience and just because you can start trading with $50 doesn't mean that you should.
It takes less expertise to swing trade than day trading. Hence, beginners can get success as swing traders more quickly than in day trading. Day traders make several transactions a day, multiplying profit opportunities. But gains and losses are relatively smaller.
It is a more involved trading strategy than buy-and-hold investing, but it can also be more profitable. To earn 10% monthly through swing trading, you would need to make a profit of 10% on each trade. This is a challenging goal, but it is possible with careful planning and execution.
Swing traders will often look for opportunities on the daily charts and may watch one-hour or 15-minute charts to find precise entry, stop-loss, and take-profit levels. Swing trading requires less time to trade than day trading. It maximizes short-term profit potential by capturing the bulk of market swings.
| Annual Salary | Weekly Pay | |
|---|---|---|
| Top Earners | $31,500 | $605 |
| 75th Percentile | $28,000 | $538 |
| Average | $25,349 | $487 |
| 25th Percentile | $21,500 | $413 |
