Pros and Cons of Swing Trading

Swing trading is a type of investing that utilizes a medium time frame. With swing trading, you are not going to be trading on the short-term like a day trader or on the long-term like a trend follower. Instead, you are going to be trading somewhere in between. Usually, this type of trader stays in a position from one to five days. Here are some of the pros and cons of getting involved with swing trading.


One of the big advantages of swing trading is that it can save you time. Swing traders can trade on flexible schedules. With this type of trading, you are not going to have to sit in front of your computer screen for hours at a time and stare at price charts. Instead, you will analyze the investments that you want to invest in, make the trade, and then leave. You do not have to babysit the trade or watch over it. For working people who are trying to integrate trading into their lives, this type of trading can be very beneficial.

Another advantage of this type of trading is that it is not going to be as difficult to learn as some of the trading strategies that you would have to implement as a day trader. Day traders have to learn a lot of information in order to be successful. They have to build multiple strategies and be extremely good with them. With a swing trading strategy, an individual that does not know as much about the markets could potentially be profitable.

With this strategy, you are going to be able to work with much more manageable numbers than with a long-term strategy. With many long-term investment strategies, you have to have very large stop loss values and large take profits. This is difficult for some investors to work with. 


This type of strategy has a few disadvantages as well. For one thing, you are going to have to be able to let the system run its course. With this type of strategy, you are going to have to place the trade and then walk away. Many people want to continually monitor the trade and make sure that it is doing well. The problem with this is that many traders let emotions get in the way. Instead of relying on the system itself, they try to intervene and usually end up making a mistake. It takes a lot of confidence in your system to look at the market, see that it is reversing against the trade that you have taken and not try to step in.

Another disadvantage of this strategy is that you are going to have to set aside a certain amount of time each day to check on your positions. For individuals that have hectic schedules, this may not be a type of investment that can accommodate them.

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