[David Waring]

Previous Lesson

Practice Swing Trading in Real Time With a Free FXCM Forex Demo and Charts



All Lessons in This Course - Next Lesson - 100 Links for New Traders

Prefer a Book? Order the InformedTrades Basics of Trading Course in Paperback Here

In our last lesson we gave an introduction to the three main styles of trading and looked specifically at the advantages and disadvantages of the most popular style of trading, day trading. In today’s lesson we are going to look at the advantages and disadvantages of the second most popular style of trading, swing trading.

Swing trading is generally defined as a style of trading where positions are held for larger gains over multiple days and up to several weeks. Traders who promote this style of trading normally feel that it combines the best of both day trading and position trading. What this means is that these traders feel swing trading gives you a similar ability to amplify gains as day trading does, with the slow pace and lower transaction costs of position trading.

A second advantage that many traders would site about swing trading, is that good swing traders plan their entries and exits in advance and since positions are held for longer than one day this method of trading does not have the same intensity that day trading does. While some traders prefer the intensity of day trading, traders who want a less stressful trading career often opt for swing trading as a result.

I think most traders would agree that the biggest disadvantage to swing trading is the increased risk per trade. Because swing traders hold positions for longer periods of time, their average risk per trade is generally higher than day traders in order to give the position enough breathing room to work. As swing traders hold positions overnight they are also exposed to the overnight risk which we learned about in our lesson on day trading.

Secondly, although swing trading does not require as much work as day trading, it still generally requires more work and resources than position trading, as good swing traders normally follow the markets very closely even when not entering or exiting a trade.

That’s our lesson for today, in our next lesson we are going to look at the third style of trading, position trading so we hope to see you in that lesson. As always if you have any questions or comments please leave them in the comments section below, and good luck with your trading!

Dear David,
I really appreciate you that you doing such great job, I told my friends also for your site, unfortunately I am new in this I want to ask you that in swing trading what is time period is it 2 day, 1 week or 1 month.

Thanks and regards

Ram

[David Waring]

Originally Posted by balraj167

Dear David,
I really appreciate you that you doing such great job, I told my friends also for your site, unfortunately I am new in this I want to ask you that in swing trading what is time period is it 2 day, 1 week or 1 month.

Thanks and regards

Ram

Hi Ram,

Thanks for the comment and for helping to spread the word about the site I appreciate it.

There is not really a hard definition for the amount of time a trade is held to be considered a swing trade but generally swing traders hold positions for more than 1 day but less than multiple weeks.

Best Regards,
Dave

[Michael]

Hi David,
Thanks for your help in the past, this site is such a great clearing house of information especially for a newbie. Is anyone time frame better suited for swing trading, say a 4 hour time frame as compared to a 15 or 30 minute time frame. I believe swing trading would be a better fit for me as I have a full time job and live on the east coast, which limits my access to the markets for day trading. I like many others appreciate all your hard work.

Thanks,
Michael

[David Waring]

Hey Michael,

Glad to hear from you and thanks for the compliment I am glad you like the site.

Most swing traders I know focus on the longer term charts for market structure and then the intermediate term charts for trade entry. An example of this would be using the weekly and daily chart to identify support and resistance levels in the market and then focusing on the 4 hour and hourly for trade entry.

Hope that helps and let me know if there are any other questions.

Best Regards,
Dave

[Borges]

Originally Posted by David Waring

An example of this would be using the weekly and daily chart to identify support and resistance levels in the market and then focusing on the 4 hour and hourly for trade entry.

Hi David,
Could you please give an example (with some current charts) of your steps for the mentioned multiple timeframe methodology? I think I understand what you mean and I am concentrating on Daily/Hourly charts myself, but an example of how you do it would be really helpful.
Thanks,
Borges.

[David Waring]

Hey Borges,

Sure thing. I put together some analysis of teh S&P a while back where I go through this process in detail which you can find at the link below:

David Waring of InformedTrades.com Analyzes the S&P for a Potential Trade

Let me know if that does not answer your question.

Best Regards,
Dave

[Michael]

Dave,
Thanks for the help, also great example you cited in the link for Borges.

Thanks again,
Michael