Swing trading offers advantages such as maximizing short-term profit potential, minimal time commitment, and flexibility of capital management. Key disadvantages include being subject to overnight and weekend market risk, along with missing longer-term trending price moves.
If trading seems frustrating and difficult to you, don’t worry, you are not alone. Many traders, if not most, begin their trading careers with lofty goals and a full tank of hope, but those things can fade very quickly if you aren’t approaching the market from the right ‘angle’.
At Learn To Trade The Market, we take the view that whether or not a retail trader (like you or I) achieves consistent success in the market depends heavily on which method the trader uses. That is to say, we believe if you are trading with the wrong methodology, there is no way you will ever make money, even if you’re doing everything else right.
Trading success is the end result of getting the “3 M’s” right; Method, Mindset and Money Management. You cannot succeed with only two of the three; you must have all three down pat.
In this lesson, I want to focus on the first M; the Method that will give you the best chance to succeed at trading. You need to understand which method is the best, why it is the best and how you can master it, so let’s get started…
What are the Advantages of Swing Trading?
There are several reasons why swing trading has been so widely embraced by many astute and experienced traders.
Good Returns: Since trades are held for a reasonable length of time, this allows market trends to fully evolve and mature, thereby yielding bigger and better returns per trade when compared to day trading. Annual returns vary but profit ratios anywhere between 10% and 50% are not uncommon.
Reasonable Initial Financial Layout: Your initial financial outlay for this type of trading is not excessive. A starting balance of anything from £2000 to £5000 may be required by some brokers to open a swing trading account.
Less Time Spent In Front Of The Screen: Owing to the fact that swing trading is done mainly off a daily chart, the swing trader only needs to look at the charts at the end of the trading day, in the evening actually, when the daily candle has closed and confirmed. Accordingly, they require little maintenance. You don’t have to get up early for the market’s open, you can enjoy a lie-in and leisurely start your day. Fifteen to thirty minutes at the end of the trading day is usually all that a swing trader needs to review the day’s trading activity and make any required modifications to existing open positions.
You Can Easily Swing Trade Whilst Working A Day Job: Since swing trades require such little ongoing maintenance, they are ideal for people who have full-time jobs but want to trade on the side for an additional income stream. Continuing to have an income generated by your day job means that you’re not going to be under pressure to take unnecessary risks. Swing trading is the ideal side-hustle for anyone looking to trade part-time or when they are still learning and transitioning to trade as their principal income.
A Dream For Stay-At-Home Mums & Dads: Let’s face it, raising a family is no mean feat. Looking after the kids, carefully coordinating school runs – you name it. Parenting is a full-time job and then some! The good news is that swing trading, as an evening activity, will only take up 15-30 minutes of your time after you’ve put the kids to bed. How’s that for flexible working? I love being the bearer of glad tidings!
Time For Your Hobbies: You might be looking at trading to form a supplementary income to your retirement. Who can blame you with interest rates being as low as they are. However, not all lows are bad. The low maintenance nature of swing trading and the minimal time spent in front of your computer screens means that you can get on with enjoying the things that interest you. There’s time in the day to pursue hubbies and, after half an hour’s work, time to enjoy the evening as well (for you night owls).
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