What is Swing Trading And How Does It Work?

In simple words, swing trading is the buying and selling of stocks, options, futures, etc. for a few days or a few weeks…🌺

It’s like buying stocks today and selling them after 3-4 days or after 1-2 weeks but holding period in swing trading doesn’t exceed one month….

If you are holding your positions for more than a month then it is called positional trading not swing trading….🌺

Who Are Swing Traders in Stock Market?

Those traders who do swing trading are known as swing traders….🌺

Examples of Swing Trading

Let’s say, today you bought 10 shares of a company at $10 assuming that the stock will move up in upcoming day, and let’s say after 4 days the stock went to $12 and at 12 dollars you exited your position….🌺

So, your profit will be $2 per share and $20 on ten shares, and this is called swing trading where you hold your positions only for a few days or few weeks and then you exit it…..

How Does Swing Trading Work?

The working of swing trading is very simple, first of all, you build a swing trading strategy with very high win rate and then you make position according to that strategy through your brokers platform and once you start to see profit then you simply exit the position…..🌺

So, this is how you swing trading works…..

Can You Sell Stocks in Swing Trading?

No, you can’t sell stocks in swing trading, you can only create a buy position in stocks in swing trading….🌺

There are many other ways to short sell a stock in swing trading but we are going to talk about this in any other post, when you will be reading this post then I would have written that post, so you can check that post in ‘swing trading’ category of my website….

Which Type of Analysis is Done in Swing Trading To Know Where A Stock Can Go in Next Upcoming Days?

Well there are too many types of analysis done in swing trading to determine where a stock can go in next upcoming days and some of my favourite are as follows:⤵️

  1. Price Volume Analysis.
  2. Option Chain Analysis.
  3. Future Segment Analysis.
  4. 9 & 15 EMA Crossover Strategy.
  5. Chart Based Analysis.
  6. Trend Analysis.

All the analysis which I have mentioned above comes under technical analysis…🌺

Can Swing Trading Be Done on Mobile Too?

Yes, you can do swing trading on mobile too, you don’t need to purchase big screens or laptops….🌺

What is The Failure Rate of Swing Trading?

Swing trading is less risky than day trading so the failure rate of swing trading is around 85% to 90% i.e out of 100 swing traders 85 to 90 swing traders lose money….🌺

How Long Should You Hold A Swing Trade?

There is no fixed period of time that how long should you hold a swing trade or when to you exit it, instead it completely depends upon your analysis and whether the stock is moving in your direction or not after you have made a position in that stock….🌺

If your swing trading analysis of a stock is correct then you can see profit in one or two days of making position in that stock and if you start seeing profit then you can exit your position any time after that….

You can also set target too before entering the position and once the stock hits the target then you can exit it….🌺

If you have make a position in a stock but you are not sure that whether your analysis is correct or not and you are also seeing some loss on the screen then you can exit that position in some loss or at no loss & no profit….

Why I am telling you to exit your position in such situation? The reason is you are unsure about your analysis and in this condition, stock mostly move opposite to you, so it’s better to exit at some loss or at no loss & no profit….🌺

How Many Stocks Do You Need For Swing Trading?

If you are a beginner then you should do swing trading in only one stock at a time and with lower quantities like only 10 or 50 or 100 quantities….🌺

Once you are comfortable and profitable with swing trading in one stock then you can move to swing trading in multiple stock….

Don’t forget the rule that slow and steady always wins the race….🌺

Can You Do Swing Trading in Options As Well?

Yes, you can do swing trading in options too but for beginners, it is not advisable to swing trade in options because options are really risky, they can give you significant profit in short period of time but loss too….🌺

So, if you are a beginner then you should stay away from options for swing trading, only do swing trading in equity segment i.e in stocks….

Once you have become profitable in equity segment then you can move on to options for swing trading….🌺

Swing Trading vs Scalping

Swing trading and Scalping both are part of trading but there are many differences between these two and these differences are as follows:⤵️

  1. In swing trading you hold positions for a few days or for a few weeks but in scalping you hold positions for a few seconds or a few minutes….
  2. Swing trading is little bit easy but Scalping is really hard to do…
  3. Swing trading is less riskier than scalping whereas scalping is really risky…
  4. In swing trading you need to wait for a few days to see results whereas in scalping you can see results in a few seconds….
  5. Brokerage in swing trading is little bit less than scalping….🌺

Swing Trading vs Day Trading

Swing trading and day trading are also a part of trading but completely different i.e there are many differences in between these two which are as follows:⤵️

  1. In swing trading you hold positions for a few days but in day trading you hold positions for only one day i.e if you buy a stock then you sell it the same day you bought it….
  2. In swing trading you need to pay less brokerage but in day trading you need to pay little bit more brokerage….
  3. Swing trading is little bit easy but day trading is really hard to do and that’s why most day traders lose money in it….
  4. Day trading is more riskier than swing trading…
  5. Swing trades take a few days to show results but in day trading, you can see results really fast like in a minute or two…🌺

Swing Trading vs Investing

Swing trading and investing add closely related to each other so there are very less differences between these two which are as follows:⤵️

  1. In swing trading you hold positions for a few day or a few weeks but in investing, you hold positions for several months and years….
  2. Both swing trading and investing are less risky than any other type of trading….
  3. In investing, you need to wait for several months to see results but in swing trading you just need to wait for a few days…
  4. Swing trading analysis is done on lower chart time frame like 1 day but investing analysis is done on higher time frame from 1 day to 1 week to 1 month chart….🌺

SO, this was my post about swing trading, I have tried my best to cover all queries related to it, I hope you liked my post….🌺

Will see you again in next post, till that take care and stay ahead….

Bye and peace….👍🌺