Swing trading

Swing trading Basics

Swing trading is one of the most popular trading styles, and sets out to profit from medium-term price moves lasting from a few days, up to several weeks. Being less fast-paced than some other trading forms, like day trading, it’s the perfect type of trading for beginners or even more experienced traders who want a trading form that can be combined easily with a full-time job. So, given these circumstances, is trading really that profitable? Is it enough to make you rich?

Swing trading is a trading style that involves holding on to a position for a period of time ranging from a couple days to a couple weeks.

It’s an active trading strategy that captures the swings in market sentiment and allows you to enter and exit at key levels. Swing trading differs from day trading in that you are likely to hold your positions overnight. Your trades might last several days or even weeks.

Swing trading strategies are generally driven by technical analysis.

Swing trading Rules

Swing trading is a business, so you must stick to certain rules designed to keep you in the game. The most important rule is the rule of survival. Surviving means not only managing risk, but also following your trading plan and sticking to your trading rules.

Follow the lead of the overall market and industry groups

Trade in the direction of the overall market. In a strong bull market be close to fully invested. When the market is in bear mode, hold cash. In trading ranges, opportunistically buy strong setups while avoiding excessive risk.

Recognize that industry groups make a difference in a security’s returns. When an industry group is in the top of the pack (as identified by Investor’s Business Daily), the stocks in that group are likely to outperform. Conversely, when an industry group is in the bottom of the pack, the stocks in that group are likely to underperform the overall market.

Don’t let emotions control your trading

Emotions can be your biggest enemy. Traders who lose their entire account often start out losing a small amount and then try to break even or prove themselves right. Their ultimate failing lies in their inability to control their emotions.

Diversify, but not too much

Hold a diversified portfolio of positions. You should have at least ten different positions, and they should be in different sectors. If possible, incorporate multiple asset classes in your swing trading. For example, include technology stocks, developed market equities, emerging market equities, and Gold ETFs.

It’s possible to diversify too much. Limit the portfolio to twenty positions. A swing trader needs concentration to make large profits. The more positions you hold, the closer the returns of the portfolio will be to the market.

Manage risks: Set your risk level

Your risk level represents the price that, if reached, forces you to acknowledge that your original thesis for trading the security is wrong.

Manage risks: Set a profit target or technical exit

Your profit target is often based on a previous support or resistance level. Some swing traders set predefined profit targets of selling 50 percent of a position after it achieves a 5 percent gain from entry and selling the other 50 percent after it reaches a 10 percent gain.

Use limit orders

Use limit orders rather than market orders. A limit order ensures that your execution occurs at the price you specify, whereas a market order can be filled at any price.

Use stop-loss orders

Stop-loss orders help you deal with fast-moving markets, limit your downside, and help take emotions out of the game

Keep a Swing trading journal

Trading journals organize your thoughts and the reasons behind your decisions. They should be updated for every trade you execute.

Swing trading vs Day trading

Before you determine if Swing trading is right for you, consider the several pros and cons of Swing trading relative to Day trading.

Pros

• You need to devote less time to Swing trading.

• It captures most of the upward and downward swings in price action.

• You can focus on technical analysis.

Cons

• You increase your risk by holding positions for longer periods.

• You could face sharp market reversals that generate losses.

• You cannot take advantage of day trading leverage.

The strategies that you can use for Swing trading and Day trading may be similar, but the major differences between the two are time you hold your position.

Day traders are in and out of trades during a trading session. When you swing trade you might hold positions for days or even weeks.

Swing trading Books

Here are two Swing trading books that readers consistently provide praise for. Read a few reviews on Amazon and see if these books make sense for you.

TRADING STRATEGIES: 4 BOOKS IN 1: DAY TRADING + FOREX TRADING + SWING TRADING +FUTURES TRADING . HOW TO TRADE AND MAKE MONEY

By Andrew Rich, January 2020

Are you eager to join the word of trading? Want to start making money without breaking a sweat? If yes, then keep reading…

Would it not be great to have a successful business and be your own boss? Just sit back and watch your money grow as the business succeeds! Does this sound like a daydream? It might, but this dream is closer to reality than one might imagine.

In this book, you will learn strategies of trading and investing for a living. The following topics are covered in detail:

• Forex trading

• Day trading

• Swing trading

• Futures trading

The New Trading for a Living: Psychology, Discipline, Trading Tools and Systems, Risk Control, Trade Management (Wiley Trading) 1st Edition

by Alexander Elder, October 2014

This classic guide teaches a calm and disciplined approach to the markets. It emphasizes risk management along with self-management and provides clear rules for both. The New Trading for a Living includes templates for rating stock picks, creating trade plans, and rating your own readiness to trade. It provides the knowledge, perspective, and tools for developing your own effective trading system.

All charts in this book are in full color, with clear comments on rules and techniques. The clarity of this book's language, its practical illustrations and generous sharing of the essential skills have made it a model for the industry―often imitated but never duplicated. Both new and experienced traders will appreciate its insights and the calm, systematic approach to modern markets.

Price Action Swing trading Books

Price action Swing trading books focus on trading based on market structure and Technical analysis. Add the two books below to your reading list.

Harvest Bountiful Trading Profits Using Andrews Pitchfork: Price Action Trading with 80% Accuracy Paperback

by Bryan V Post, February 2021

Regardless of our Trading strategy or the time frame in which we choose to trade, we all have to answer the same question when sitting down to look at price charts: "What is going on with this market and how do I trade it profitably?"

Day trading, Swing trading, Position trading, Trend following - our strategy for interacting with the financial markets doesn't matter. Regardless of what we are trying to accomplish in the markets, we need to first figure out what price is doing.

Part I of this book focuses specifically on Andrews Pitchfork, the basic principles for using forks, and the five Andrews Pitchfork rules.

The second half of the book is about understanding price behavior: what price is doing now and what it is likely to do in the future.

By integrating the techniques in Part I and Part II a trader can build a framework within which they can apply their entry/ exit strategies and money/ risk management techniques. Old pros and newbies alike will find value in this book.

Price Action Breakdown: Exclusive Price Action Trading Approach to Financial Markets

by Laurentiu Damir, February 2016

Price Action Breakdown is a book on pure price action analysis of financial markets. It covers concepts, ideas and price action trading methods that you most likely haven't seen anywhere else. The knowledge contained can be used to trade any financial market such as Forex, Futures, Stocks, Commodities and all major markets.

It is based on trading the pure price action using key supply and demand levels. Reading, learning and applying the concepts and trading methods described will greatly improve your trading in all aspects, starting from analyzing the price movements on your charts to trade entry and exit. You will get familiar with concepts like value of price, control price, excess price, moving supply and demand levels. It comes with an exclusive price action trading strategy that will add great value to your trading.

Swing trading Strategies Book

These are two popular Swing trading strategies books that get consistently positive reviews from readers. While it is unlikely that either of these books will provide a turn-key trading strategy that is also profitable, the strategies described in the books may provide the basis for an effective Swing trading strategy.

Bulletproof Setups: 29 Proven Stock Market Trading Strategies

by Matthew Giannino, February 2020

Bulletproof setups offers stock market traders 29 in-depth trading strategies. These strategies allow traders to fully understand very common patterns and occurrences in the stock market. This book offers reasons why these setups occur, why they work, and how to exactly enter trades with them. There are only 29 setups in this book, one a day for a month, with the whole goal of giving you an unfair advantage in the stock market.

High Probability Trading Strategies: Entry to Exit Tactics for the Forex, Futures, and Stock Markets 1st Edition

by Robert C Miner, October 2008

In High Probability Trading Strategies, author and well-known trading educator Robert Miner skillfully outlines every aspect of a practical trading plan--from entry to exit--that he has developed over the course of his distinguished twenty-plus-year career. The result is a complete approach to trading that will allow you to trade confidently in a variety of markets and time frames.

With this book as your guide, you'll quickly learn how to recognize high-probability trading opportunities, pinpoint exact entry and stop prices, and manage a trade until it's completely closed out. You'll discover how the four key factors of dual-time-frame-momentum, pattern, price, and time can guide you down the path to trading profits. As you become familiar with the proven strategies and techniques taught in High Probability Trading Strategies, you'll also come to understand the type of market information you can use to make specific trade decisions and how to execute those decisions from start to finish.

Best Books On Swing trading

The best book on Swing trading is the one that resonates for you and helps you become a better trader. Read reviews from other traders and see what they think about a book before purchasing the book yourself.

How To Swing Trade

by Brian Pezim, October 2018

Swing trading is a type of trading in which you hold positions in stocks or other investments over a period of time that can range from one day to a few weeks or more. If you are a beginner trader, this book will equip you with an understanding of where to start, how to start, what to expect from swing trading, and how you can develop your own strategy based on your personal goals.

In this book you will learn….

• What is Swing trading and how does it differ from other trading strategies

• Tools you need to swing trade

• How to manage your money and the risks of Swing trading

• Charting basics using popular Technical analysis tools

• Swing trading strategies

• Entries and exits

• How to run your trading activities like a business

Trading Price Action Trends: Technical Analysis of Price Charts Bar by Bar for the Serious Trader

by Al Brooks, November 2011

The key to being a successful trader is finding a system that works and sticking with it. Author Al Brooks has done just that. By simplifying his trading system and trading only 5-minute price charts he's found a way to capture profits regardless of market direction or economic climate. His first book, Reading Price Charts Bar by Bar, offered an informative examination of his system, but it didn't allow him to get into the real nuts and bolts of the approach. Now, with this new series of books, Brooks takes you step by step through the entire process.

By breaking down his Swing trading system into its simplest pieces: institutional piggybacking or trend trading (the topic of this particular book in the series), trading ranges, and transitions or reversals, this three book series offers access to Brooks' successful methodology.

Swing trading Course

Dr. Van K. Tharpe is a professional trading coach and consultant. Through The Van Tharp Institute (VTI) he offers multiple courses in written, video, and online formats. Check out VTI’s free resources before committing to a premium course.

How To Develop A Winning Trading System That Fits You Home Study + Audio

Gain all the benefits from Dr. Van Tharp's years of modeling traders and his research on how profitable trading systems are developed.

This program helps you determine what type of trading system will suit you personally and how to create it.

Learn little-known, closely-guarded secrets that are not published in books and that you’re not likely to find unless you accidentally stumble upon them.

Peak Performance Home Study for Traders and Investors

This home study course is Dr. Tharp’s masterpiece. It is designed for all levels of investors and traders—beginners, advanced, unsuccessful traders seeking to better their performance and successful traders who want to continue to improve.

The course contains five workbooks and four audio MP3 (also available via CD). Dr. Tharp carefully crafted the information from his studies into a model that people like you can use to improve your skills and increase profits.

Swing trading Course Reviews

Becoming consistently profitable Swing trading will require education and practice.

There is a wealth of free information available on the internet along with numerous courses, seminars, and workshops.

When evaluating paid courses keep in mind the old adage, “Those who cannot do, teach”, and be careful.

Warrior Trading

Warrior Trading is a multi-million dollar trading education business founded by Ross Cameron in 2012.

Besides various trading courses, you will find a real-time stock chat room for day trading, free trading tools, education packages for traders at different skill levels, and a stock market simulator.

Warrior Trading is a one-stop shop primarily for trading beginners with a focus on learning trading from scratch.

Van Tharp Institute (VTI) Peak Performance Home Study Program

Van Tharp Institute is a trading school offering a smorgasbord of trading products and services.

Dr. Tharp offers swing traders and investors a holistic approach to wealth, freedom and peace.

The Peak Performance course focuses on how to condition your life and mind to be in peak state for the demands of trading.

In addition to psychological and discipline information, the course covers NLP (Neurolinguistic Programming) modeling for optimum trading.

Best Way To Learn Swing trading

There is only one way to learn how to trade and that is to do it.

Like all skills, it will take 10,000 hours of practice to achieve mastery of Swing trading so practice, practice, practice.

Fortunately there are trade simulators and virtual accounts that allow an aspiring trader to practice in a somewhat realistic manner. Simulated trading is an excellent way to learn the basics of Swing trading and to test new trading strategies.

One of the keys to learning is to trade really, really small positions at first. Keep your position sizes small until your trading becomes consistently profitable. Limiting each position to a maximum of 2% of trading capital is a common guideline.

Balance education with practice. Searching endlessly for the Holy Grail can lead to the “paralysis of analysis” that stops some aspiring traders from ever entering their first trade.

Develop a trading plan and trading rules. Write them down and follow them rigorously. Revise them as needed based on results.

Successful discretionary (gut or seat-of-the-pants) traders are extremely rare. Maximize your odds of success by starting with a trading plan and rules.

Tips For Swing trading

• Develop a trading plan. An effective trading plan is detailed and written down.

• Pick stocks from the top down. The industry group in which you trade is more important to your success than which company you pick in that industry group. So, as a swing trader, concentrate purchases on industry groups that are in the top 20 percent of the market.

• The markets aren’t personal. Your losses and profits are a function of your trading ability and the markets in which you trade. The true, professional trader is a master of his or her emotions. Profits don’t lead to extreme joy, and losses don’t lead to extreme pessimism.

• Diversification allows your portfolio to withstand market volatility — the gains from a few positions can offset the losses from others.

• Trade with the Market trend. Go long only if prices are trending up, and go short only if prices are trending down.

• The swing trader’s job is to be patient and execute trades only when the timing and price are right.

• Keep a trading journal. A trading journal is your coach. By recording the reasons you enter a position, you can review whether your assumptions are correct, and you can find out whether your trading plan needs adjustment. A trading journal reveals habits and patterns, and you can adjust accordingly.

Conclusion

Swing trading is a challenging endeavor.

Reaching the point of consistent profitability will require education and practice in Swing trading basics.

You can increase your odds of success by developing a written Swing trading plan and Swing trading rules. These written documents detail how your will run your trading business on a day-to-day basis.

Swing trading vs Day trading is really a matter of personality, trading style, and tolerance for risk. Both styles of trading have pros and cons that you will have to evaluate for yourself.

Swing trading strategies can be found online and in books. Use these strategies as the starting point for developing a Swing trading strategy that is uniquely your own.

There are lots of Swing trading books available these days. Look for free copies in your local library if possible and read online reviews about a book before purchasing it. Amazon book reviews are a great resource, whether you purchase books on that platform or not.

Price action Swing trading books are obviously a subset of the larger genre. Books about price action will typically focus on market structure and price behavior rather than technical indicators.

Swing trading strategies books provide examples of trading strategies that a reader can apply as-is or modify to match their own trading style and personality.

The best books on Swing trading are the ones that resonate with you and provide actionable information. After reading a few trading books you will recognize that many of them offer nothing but page after page of useless information.

Swing trading courses are available from numerous outlets and range in price from less than $100 to well over $10,000. Worthwhile education is not cheap, but cost alone does not ensure that the education will be useful.

Before handing over your hard-earned-money for trading education, look for Swing trading course reviews and see what others have to say about the training.

The best way to learn Swing trading is hands-on practice. Fortunately is is very easy to establish a simulated trading account where you can practice until your trading is consistently profitable.

Most important tips for Swing trading:

• Develop a trading plan and write it down

• Trade in a simulated account at first

• Trade very small positions when first trading with real money

Here's to your success, and happy trading!

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