Swing Trading Education is part of the global education relating to stocks. The happenings in hundreds of national and international stock exchanges impact the price of a particular share. If a bullet is fired, the fear of war and its splinters influence the economic scene in the whole world. Fear is such a strong factor, it can initiate unprecedented slump in the market. It has happened in the past and set all the traders, brokers, analysts and researchers gaping!
Since emotional bonding with the stock exchange cannot be avoided by an investor totally, the best idea is to keep it to the minimum level. Successful investors need to curb the emotions and trade like matter-of- fact businessmen. How to carry on with the swing trading, minus emotions, and negotiate the trade on a successful note? The following “rules” can help an investor to perform his job intelligently to reap profits.
Not only tolerate, but accept losses when swing trading
Market is like the oscillating pendulum. One is not expected to catch it and bring the clock to halt. One needs to watch it and match the timings of the entry. Be fleet-footed to make the quick entry. Otherwise the opportune time is gone and along with that the profits! A wavering decision, may land one in losses, and if this happens (and it mostly happens) when one has just opened the swing trading chapter in one’s investing career, disenchantment is natural. The moot question is one prepared for such an eventuality financially and emotionally? Can one lose and still continue to trade? For success, continuity is essential, keeping in mind the lessons of the past mistakes.
Minimize losses, maximize profits – Everyone wishes for such an ideal situation, but the question is how to achieve it? With application and patience it is possible. Decide about the selling and buying levels in advance. One has the good old weapon of ‘stop-loss’ to minimize the losses. As for selling though it is prudent to fix the level, in a Bull market, when the chances of profits are bright, one can do the upward revision of the limit for selling.
The impact of correction – The fear of correction hangs like the Damocles Sword in the Bull Market. All the hard-earned profits over a long period can get wiped out in a single trade, one wrong entry, and miscalculation. One well-researched article in an important financial magazine can create uncertain waves in the market, and unleash such a severe slump, which no one will be able to control. Differentiate between a genuine correction and the fear of correction. In the later case, the market will bounce back within a short time, and during the intervening period an astute investor will be able to reap profits with some quick swing trades. Even the blue-chips will be moderately priced, due to the overall slump in the market. The ratio of sellers will be much more than the buyers.
The perfect order is the market order – An investor, who thinks that he can be permanently at war with the stock market, is bound to fail. Fire when it is necessary and ‘cease-fire’ when it is essential. Co-operate with the market–that is the only way to operate in the market. There are many other factors that influence the price of a stock, apart from the companies making or losing money. Today’s investor is not willing to take unnecessary risks in the market, as he has the stand-by of bank deposits and government bonds, which offer a reasonable return.
Remain focused; patience and education are the unfailing virtues – Swing trading falls between day trading and those who invest with long-term objectives. The element of time-frame which is of medium duration is important and entry and exit points are the essence of swing trading. The stocks are chosen with the expectation that their prices will soar quickly in an upbeat market.
In fine, swing trading education is about placing stops, understand the support and resistance zones, minimize risks and maximize profits—this in short is the complete syllabus of swing trading.
