10 Swing Trading Strategies Every Stock Trader Needs to Know

If you’re planning on trading stocks for profit, you’ll want to know the best method on how to do it. Here are some swing trading strategies you need to try.

Swing trading is a very lucrative industry. In fact, in 2014 alone, the average swing trader made about $84,000. Many of these people did it part-time, supplementing their income from other jobs.

But they all had one thing in common: successful swing trading strategies.

Swing trading is complex, and without the right strategies in place, you might find yourself falling behind. Worse, you could lose tons of money on multiple trades.

Though you can never completely get rid of risk, you can set yourself up for success. Here are a few strategies that will help, especially when you’re first starting out.

  1. Pick the Right Broker

You need to find a trading platform to work with. It’s how you access the market, buy and sell shares, and gain insight into trends.

But many of the big-name trading houses like Merrill Lynch and Morgan Stanley are not suited to swing trading.

Instead, you’ll want to look into using a discount broker. These firms give you access to the same market but at a lower price. You’ll pay to trade through their platform and that’s it.

The larger and more traditional brokerage firms provide services that might not be of interest to you when you’re starting to swing trade. Worse, they charge a premium for those services!

  1. Follow the Market Trends

When you’re first starting out, predicting how the market moves is almost impossible. This means you need to start following market trends.

Check the stock charts for all shares you’re interested in. See how they’ve performed in the past. Then, create a strategy that follows those trends.

This helps you create consistent income even as it reduces your risk. As you become more experienced, you’ll start to spot trends as soon as they begin and can better invest for higher returns.

  1. Make Use of Technical Analysis

You can’t rely on your own interpretations of the market alone. You have to pay attention to long-term and large-volume analysis.

Otherwise, your understanding of the current trends will be limited at best. The narrower your focus is, the less prepared you’ll be to understand where the market is going. This makes it hard to tell when it’s the right time to sell or when you should sit on your shares.

  1. Look at the Analysis as a Whole

Single statistics are useful. But they don’t give you the whole picture.

Instead, use every tool in your arsenal and see what the trends really look like. Just because one indicator shows that a trend is almost over doesn’t mean it is.

Remember, swing trading isn’t passive. You have to work at it. You need to understand the research and take the time each day to see what the market is doing for your shares.

  1. Get an Early Start

One of the most important swing trading strategies is to choose stocks right at the beginning of a trend or cycle. The sooner you get on a trend, the better it is for your bottom line.

Buying in when the trend is just starting gets you the lowest price on certain shares. The less you pay, the more profit you stand to make when you sell at the end of the trend.

  1. Plan Ahead

Swing trading means playing the long-game. And the only way to do that successfully is to create a clear plan.

Buy shares that you’re confident in. If you’re worried about throwing cash down, look for shares that are relatively low-risk. Then start thinking about the market signs that will tell you it’s time to sell.

This may take a few days, and that’s okay. You’re a swing trader, not a day trader. Patience is the name of the game.

Keep watching for those signs and make your move once it feels right. But always stick to the plan! If you don’t know where you’re going, you’ll end up acting like a normal investor who holds onto shares for months on end.

  1. Keep Track of Progress

Stocks and trends tend to follow the same patterns over time. But the only way you’ll know for sure is to keep track of those patterns.

Start a daily or weekly journal. This can be as simple as jotting movements down in a notebook. But many people prefer to keep a digital spreadsheet.

Note the price you paid, the size or number of shares, and your entry and exit points for each share. Explain why you chose to enter when you did and why you plan to exit at a certain time.

Then refer to these notes down the road to see how accurately you read the market. If you notice consistent mistakes, take the time to improve on those areas.

But if you notice things you’ve consistently done right, pay attention! This is what works out of your swing trading strategy. You can use this information to grow your business and increase profits!

  1. Be Willing to Adjust on the Fly

In swing trading, you need to be two steps ahead at all times. This means you need to research market movements constantly.

Keep an eye on the stock charts throughout the day and be proactive. Even if it means disrupting your plan.

Remember, you’re not sitting on stocks for decades. Your aim is to sell them when the price hits a new high. Pay attention to what the charts are telling you and adjust your plan on the fly.

  1. Forget the Single Indicator Idea

Swing trading is a tricky business. And the more information you have on hand, the better.

So, start looking at different indicators. When each indicator is showing the same general message (sell now), pay attention.

If you make the decision when a single indicator says the time is right, you run the risk of missing substantial growth and profit. Rely on multiple indicators before you make a decision.

  1. Manage Multiple Positions

Do you have to purchase more than one type of stock? No. But it helps.

It’s all about controlling your risk and offsetting potential losses with profits. The more positions you have, the more opportunity you have to bring in money.

Swing Trading Strategies Are Only the Beginning

Swing trading strategies are just that: strategies. They don’t guarantee profits. But they can help you set yourself up for success in business as long as you take the time to put them in place.