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Swing Trading

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Why swing trading strategy is the best way to make money?

The module taught us everything about Swing trading. In addition, we have noted some key points to justify why Swing trading is the best way to make money in the stock market.

1. Regular income - It is generally said that markets function in the 80:20 rules i.e., markets trend 20% of the time and are range bound in 80% of the scenarios.

Swing traders are best suited to such range bound markets. Prices oscillating between support and resistance gives swing traders multiple opportunities to make repeated, small profits.

2. Fast results - Swing trading involves holding positions for a small period of time lasting from a few days up to a month. Hence traders can seek to earn profits and recover their capital in a small-time frame unlike portfolio investing which involves holding a stock for a relatively longer time period.

Since swing trading involves strict stop losses, as soon as price hits stop loss the trader can exit their position and enter in another trade.

Hence in swing trading, the capital of a trader is not held up in one particular trade for a very long time and it gives fast results either way.

3. Easy to learn & execute - Fundamental analysis requires in-depth knowledge of accounting and analyzing financial statements whereas swing trading relies on understanding of price patterns and movements which are comparatively easier and do not require formal training. Hence, common people with regular jobs can learn technical analysis and use this knowledge to trade. 

Swing trading can also be started with a small capital provided strict stop losses are maintained.

4. Minimum time required - Swing trading does not require one to be glued to their screens. Swing trading does not require traders to be full time professionals and it can easily be carried on along with regular business/profession.

Swing trading does not require multiple screens, professional set-up, multiple indicators to track price action and hence can be done by all market participants.

Since swing traders are comfortable holding their positions overnight, unlike day trading, this obviates the need for them to be physically present before the screen and exit their positions at market closing.

5. Suitable for novice traders - Novice investors starting their journey in capital markets find swing trading easier to begin with since it does not require fundamental analysis or in-depth knowledge of financial markets. 

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Units 12/14