Swing Trading Guide - How to Start and learn to be a Swing Trader | [Step By Step Guide] (2024)

When people ask us what trading form that’s suitable for a beginner, we always tell them that they should look up swing trading. Being a somewhat slower paced form that holds great profit potential, it’s ideal for a beginner. Especially considering that it’s much easier to get started with swing trading than with other trading forms. So what exactly is swing trading?

Swing trading is ashort termtrading form where you hold your trades for 1 day up to a few weeks at most. Swing traders often rely heavily on technical analysis to form their strategy, which they use to know when to enter and exit the market. Swing trading can be categorized into discretionary swing trading and systematic swing trading. Of those two, systematic swing is by far the best option.

How to start swing trading?

Even if swing trading isn’t the most advanced form, there is quite a lot to it. In this complete guide to swing trading we’re going to cover everything you need to know to start your swing career.

We’re going to cover the tools you need, why the strategy is so important, how you build a strategy, as well as the more practical aspects of swing trading.

In more detail, these are the topics we’re going to cover:

Here you can find our archive of swing trading articles.

Discretionary vs Systematic Swing Trading (Important!)

If you have watched videos or read articles about trading, you’ve probably stumbled upon many different trading strategies that make use of combinations of popular patterns and swing trading indicators.

Let us be clear. Most likely the strategies you’ve read about so far don’t work. As full-time traders, we test everything on historical data before we trade it, and nearly every time we find that what’s shared online is nothing but garbage!

In order to succeed in today’s markets, which are becoming ever more competitive, you need to have the ability to ascertain what works and not on your own. And this is done best with a systematic approach, meaning that you use backtesting to see if a strategy works or not.

And that’s also the type of swingtrading we’re going to cover in this article!

Related trading: Great article about swing trading from an actual swing trader.

Practical Considerations

Before we get to the meat of this article, we believe it’s wise to start with some more practical considerations. Some of these things, such as transactional costs, could have a significant impact on your results as a trader, so we urge you to not skip this part.

Let’s start with a common question, namely ” how much capital do you need to swing trade?”

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How Much Capital Do You Need To Swing Trade?

Generally, swing trading requires much less capital than other trading forms. Sometimes you could start with as little as a few hundred dollars. However, the amount you will need depends on a couple of factors:

1. The commission and fees
2. The price of the stock you want to buy

Commissions and Fees

First of all, you must understand that commissions and fees quickly could eat into your profit. If your strategy has an average profit of around 1$ per share, and you pay a commission at $0,5 per share, then you there won’t be much left for you.

Try to keep your costs as low as you can. Today there even are brokers who offer trading without any commission whatsoever. In the long run, such offers could have quite a significant impact on your end results!

The Price of the Stock you Want to Buy

What also impacts the capital you need, is the price of the stock you want buying. For example, there are stocks that trade for several thousand dollars each. Naturally, if your trading capital is only a few hundred dollars, those stocks are beyond your reach.

What you also need to consider is how much risk you can take. If you buy a stock that trades for $500, and your stop loss is $400, then your risk is $100. If your trading capital is just enough to buy that stock, then you’re risking 25% of your capital on that trade, which is way too much.

Later in the article, we’re going to cover how to calculate risk management correctly.

Other Expenses You’re Going to Have!

Here are some of the costs that you will have in your swing trading:

• Commission- This is the price that your broker charges for the execution of your trade.
• Slippage- This is when your trade is not executed at the price where you placed your order. This could be because the market moved slightly during the time it took for your order to reach the exchange, or because there were no bids at that price.
• Taxes
• Trading software – More and more software is becoming free as competition tightens.
• Live data- Depending on what market you want data for and your broker, this could range from being free to costing several hundreds of dollars each year.
• Historical data- If you want to develop your own strategies for your swing trading, you might have to buy additional data that goes further back in time.

As always it’s very important to make sure that these trading costs are kept to a minimum. Also, the bigger your trading account is, the less of an issue they become for you. With bigger trading volumes you tend to get better commission deals, and the other costs become a much smaller share of your total account size.

Don’t miss: Best Swing Trade Stocks

However, in case you’re starting out with perhaps $1000, then keeping costs low is crucial. For example, a premium data subscription often costs somewhere around $30-$100 a month. Having that type of recurring cost would make swing tradings impossible! Just to break even, you would have to make 36-120% in annual returns!

However, today you can actually start swing trading for basically $0. Many brokers offer free charting and trading platforms, and even free commission!

Swing Trading CFDs or Stocks?

CFD brokers are ubiquitous on the web, which also is true about their aggressive advertisem*nt campaigns. And with so much advertisem*nt, it’s not strange that these brokers manage to attract a lot of aspiring traders.

In our opinion, you should stay away from CFDs and trade stocks instead. A CFD contract isn’t standardized, like for example futures contracts. What this means, is that the CFD broker is the one who sets the conditions for the contract. In other words, you’re at the whim of the CFD broker, which could become an issue.

Another thing you should be aware of when it comes to CFD brokers is that their zero-commission offers most times aren’t as good as they seem. Instead of charging you a commission on every trade, they take a spread. That is, you have to sell your contract a bit below the market price, as well as buy it a bit above the market price. The difference between the ask and bid price – the spread – then goes right into the CFD broker’s pocket.

Should You Swing Trade Penny Stocks?

Penny stocks often attract the attention of newcomers to the markets. However, they are not suitable for most swing traders (or day trader). Especially not if you’re a beginner!

Penny stocks are highly volatile and riskful securities, and many times don’t even trade on a regulated exchange. Their thin trading volume also means that they often are subject to market scams, that will make the price surge quickly, and then crash in a very short time.

Later in the article, we’ll cover how to choose the right stocks to swing trading. However, as of now, just stay out of penny stocks, and you’ll make yourself a big favor!

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Advantages of Swing Trading – Pros and Cons

Before going on to our step by step guide, we want to share with you what we believe are the greatest benefits of swing trading. After having read this, we’re sure you’ll aggre with us that swing trading indeed is one of the best trading forms!

1. You Can Trade as a Hobby or Part Time

As we’ve mentioned previously, swing trading is a great trading form for beginners and those short on time. Since most swing trading strategies exit a trade on the open of the trading days, you don’t have to be glued to a computer screen all day. All it takes, after having found a trading strategy, is to spend perhaps 15 minutes on scanning the stocks on your list for buy signals and place orders for the coming trading day. Stop loss orders included!

2. You Can Make Substantial Returns

Generally, the longer time you hold a trade, the more room you give it to develop in your direction. This is very important in order to cover transactional costs and slippage, which is something you could have issues with in trading forms that hold on to trades for a shorter time period. For example, many day trading strategies aren’t profitable because they won’t work when you account for things like slippage and commission!

3. Less Stress

The fact that you can easily swing trade while working full time, means that you don’t have to be stressed about making money each month. You have your paycheck coming in every month, and will survive regardless.

In addition to that, stress has a negative impact on your trading, and makes you more prone to committing mistakes.

4. You Don’t Need Much Money!

Anybody with as little as a few hundred dollars can start swing trading. Today, the only thing you need is a trading computer and some free tools!

Disadvantages of Swing Trading

Now, there, of course, are some disadvantages as well, but in our opinion, they are minor things.

1. It Might Be Hard to Grasp in the Beginning

Even if swing trading is the best and easiest trading form for beginners to learn, there are quite a lot of things you need to grasp. However, this isn’t a disadvantage that only applies to swing trading. On the contrary, other trading forms are much harder to learn!

2. You Could Lose Your Money

As with all types of trading, you could incur substantial losses with swing trading. Now, if you have a robust trading strategy, your chances of success increase manyfold, but nothing is 100% secure.

Most people who lose money in swing trading lose because they either risk too much, don’t have a profitable trading strategy, or fail to follow their trading strategy.

By the way, we’re going to cover all these mistakes later in this article!

3. You Can’t Diversify Very Much

Swing trading is a trading form that’s hard to achieve broad diversification with. For example, if the market is going down, most stocks will go down too, and in the event of a market crash, you could be hit quite hard.

In this sense, swing trading isn’t as sophisticated as algorithmic trading with futures. There you trade across many different and uncorrelated markets, which allows for superior diversification. Have a look at our article on algorithmic trading if you want to learn more!

Now that we have covered these points, let’s move on to our step by step guide on what you need to do in order to start your swing trading career!

Step 1: Choose a Swing Trading Platform

First of all, you need to get market data and a platform where you can execute your trades.

There are many free alternatives on the market that will let you view charts, and sometimes even send orders to your broker. In addition to those stand-alone solutions, most brokers offer some kind of platform where you can execute your trades and get access to market data.

However, when we swing trade ourselves, we make use of a stock scanner to quickly see if our strategy gives any buy signals. We insert the strategy into the scanner, and can instantly see if we have any buy for that day. Having to go through stocks manually is a tedious task, especially if you’re trading all the stocks in the S&p-500 index for example.

Here are some good solutions on the market that let you scan lists of stocks. Now, there are many more alternatives, but since we’re not only going to trade a swing trading strategy, but also build trading strategies, it’s important that our software manages to also perform advanced backtests.

These are our favorite software that we use a lot ourselves!

Note that some of these platforms require that you connect to an external data feed!

1. TradeStation as a swing trading platform

TradeStation is the software we use to scan for our trading signals. It’s a trading platform, data provider, and broker. This means that you don’t have to connect the platform to a broker, or get external data. It’s all taken care of for you, and you just have to launch the platform to be ready for action!

TradeStation also has advanced backtesting features that let you backtest on a basket of symbols. For example. you could run a test on all the stocks in the S&P- 500 and see how the strategy performed across all 500 stocks.

TradeStation is our favorite platform and works very well to pick stocks and backtest on one market at a time. However, its portfolio backtesting is much slower than the competition. If you’re going to test a lot of strategies on many stocks at the same time, you might want to go with another solution on this list!

One great benefit of this platform is that it’s free for everyone who holds an account with TradeStation!

TradeStation’s coding language,Easylanguage, is also very beginner-friendly and easy to learn!

Here you can read more about TradeStation!

2. Multichartsas a swing trading platform

Multicharts is a trading platform that’s very similar to TradeStation in several regards. You can use it to scan for trading signals, and also perform advanced portfolio backtests. However, Multicharts is only a trading platform and requires that you connect to a live data stream. If you want to perform your trades through the Multicharts, you could also connect to a broker of your choice.

Now, as to speed, Multicharts’ portfolio backtesting is faster than that of TradeStation, so you should have no issues with carrying out a lot of backtests.

However, one disadvantage is the price. Multicharts cost more than $1000 dollars for a lifetime license. If you’re trading with very little money, then this might not be an option for you.

Here you can read more aboutMulticharts

3. Amibrokeras a swing trading platform

Amibroker is the fastest platform of the three on this list. However, it’s coding language is a little more difficult than that used by TradeStation and Multicharts.

If you’re going to do a lot of portfolio backtests, then this is probably the one you want to go with. However, you will have to connect it to an external data feed.

Of course, it lets you scan a list of stocks to quickly and effortlessly find the ones you want to buy.

Here you can read more about Amibroker

Other Trading Platforms for Swing Traders

Some other quite popular swing trading platforms are:

• Thinkorswim
• Tradingview
• Ninjatrader

Common Types of Swing Trading Strategies

The second step to getting started with swing trading is to create your strategy. However, before you do that, you will benefit greatly from knowing a little about the most common swing trading strategy types!

As with every type of trading opportunities, there are endless variations to the strategies you can build. However, most swing trading strategies tend to fall under any or several of the following categories.

Mean Reversion Strategies

One of the most common strategy types is mean reversion.

In mean reversion, we assume that the market tends to perform overexaggerated moves to either side, which are then correct through a reversion to the mean. That is, the market tends to swing around its average.

When the market has gone to much to the upside, we usually say that it’s overbought. Conversely, when it’s gone too far to the downside, the market is oversold. A mean reversion strategy aims to identify when the market is either oversold or overbought to give us an entry signal. This can be done in many ways, but some of the most common ones include using the RSI indicator ( as outlined in our article on the RSI indicator) or other oscillating indicators.

Trend FollowingStrategies

Trend following strategies work in the opposite way to mean reversion strategies. While mean reversion suggests that a an overexented market is likely to soon revert, trend following strategies instead suggest that the market will continue in the direction of the momentum.

Momentum swing trading strategies work, but it’s much harder to find edges that rely on momentum logics than mean reversion. However, if you find one, it could help to diversify your portfolio, given that you already trade a mean reversion strategy.

BreakoutStrategies

Breakout strategies are quite similar to trend following strategies. A breakout strategy works with a breakout level, and once a stock advances over that level, it’s thought to signal that the market is strong enough to continue in the direction of the breakout. In other words, exactly as with the trend following strategy type.

Now, most times you don’t just buy a stock on a breakout over a certain level. Most times you include filters and additional conditions, to only take those trades that are most probable to end up as winners.

Pairs TradingStrategies

Pairs trading is a trading form where you enter positions in two stocks in the same market sector, that normally are correlated with each other. You short one stock and go long in the other, since your strategy suggests that the correlation is getting weaker. As such, you hope to gain from one of the stocks going up, and the other one going down.

Sector TradingStrategies

In sector trading, you aim the identify the strongest market sector. Once you’ve identified the sector you wish to focus on, you go on to pick individual stocks that match your criteria. As such the sector selection is a type of strategy filter, where you only trade stocks of the currently most promising market sector.

Which strategy type should you Start with?

As previously mentioned, mean reversion is the type of trading strategy that’s the easiest to develop. That’s why we recommend that you start with mean reversion strategies. Once you’re trading mean reversion strategies successfully, you may go on to breakout or trend following strategies, to achieve better diversification.

Step 2: Create a Swing Trading Strategy

Once you have your swing trading platform up and running, you should not start trading right away. You need a swing trading strategy that’s tested on historical data to ensure that it works. Far too many traders use trading strategies that don’t have an actual edge, and finding one takes time and effort. As such, finding and developing trading strategies probably is what you will spend most of your time on.

Now, in order to create a strategy, you will have to go through several steps. We’ll cover every step just in a bit, but due to practical considerations, we cannot cover everything since there are many other topics that need coverage.

If you want to know about the strategy creation process in more detail, we recommend that you have a look at our article on how to build a trading strategy.

1. Step 1: Choosing the Market for Your Strategy (Or Not)
2. Step 2: Coming Up With a Trading Idea
3. Step 3: Backtesting the Idea
4. Step 4: Evaluating and Further Testing the Strategy

Step 1: Coming Up With the Trading Idea

The first step is to formulate your assumption or thesis. You need to determine what you’re going to test.

Now, normally when we define an idea, we don’t start by asking ourselves what type of strategy we want to find. We just come up with an idea.

However, in the case with the stock market, we know for sure that mean reversion strategies are easier to build than other strategy forms, as we’ve already shared with you.

As such, it could be wise to start coming up with trading ideas that attempt to make use of the mean-reverting tendency of the stock market.

So, in other words, we recommend that you start by coming up with an idea that tries to define oversold conditions in the market. That is those times when the market is likely to snap back to its average because it overextended itself.

One thing that many new traders find hard, is to find sources and inspiration for trading ideas. We recommend that you do two things:

1. Watch the Market- Have a look at a chart and see if you manage to discover anything that interests you. Load up indicators and see how they react to price movements. Just playing around with charts will spark and support a lot of great ideas!
2. Browse Trading Forums- Even if most of the things you find in trading forums don’t work as presented, it’s a great source of inspiration. Take the concepts you read about and tweak them to suit you better!

Here at The Robust Trader, we’ve created a list of the best trading forums.

Step 2: Backtest the Idea

Now, this is the step when you take your idea and see if there is any merit to it. Just code up your strategy in your trading platform, and run the backtest.

Depending on how the backtest looks, you will now have to decide whether to abandon the idea, or continue on to the next step, which is to further test and improve the strategy.

What we generally are looking for here is an upward sloping curve. The curve doesn’t need to be perfect, but we want it to be good enough to be worth our time.

In general, if the curve doesn’t look alright, you should consider abandoning the strategy idea, and try something else. You don’t want to use too many conditions to force a strategy to work, since having too many conditions and filters increases the risk of something called curve fitting. For now, you might just try to remember the name. We’re going to cover curve fitting in just a bit!

Step 3: Further Improve on the Strategy

Now, if you found that the idea produced worthwhile results, it’s time to try to improve the performance of the strategy. You do so by adding new filters that remove more losing than winning trades, to increase the profit and reduce the drawdown.

Another way you could improve the strategy is by having a look at the selection process. Since a swing trading strategy tested on a basket of symbols is bound to have times when the number of trades is greater than what you could possibly handle in live trading, you need a method to know which trades to prioritize. Changing the selection criterion could alter the results significantly!

Step 4: Validate the Swing Trading Strategy

Once you feel that the swing trading strategy is ready, you cannot trade it just yet. You need to make sure that it’s robust enough to hold in live trading.

The reason why you cannot go live with a strategy before validating it is curve fitting. When a strategy is curve fit, it means that it won’t work in live trading, and in essence, that we fit the strategy rules to random market noise rather than a true edge. Most movements in the market are random, and as such curve fitting easily finds its way into your strategies if you’re not vigilant!

Ways to Mitigate curve Fitting

There are many methods out there that claim to deal with curve fitting, but in our experience no method is foolproof. Regardless of the method you choose, you have to be careful, and can never completely rule out the possibility that the strategy you’re going to trade is curve fit.

In this article, we just have room to cover the most common method, which is out of sample and in sample testing If you want to read more about how to validate a trading strategy, we recommend that you have a look at our article on how to build a trading strategy, where this topic is covered in more depth.

Out of sample testing– In short, this means that you stuff away some of the data to use as validation once the strategy is finalized. The data that was used to create the strategy is called in sample, and the validation data is called out of sample.

The general idea is that a curve fit strategy is based on random market noise which isn’t consistent through both data sets. As such, the strategy should fall apart when subjected to new data if it’s based on random market patterns.

Conclusion of the Strategy Creation Process

Finding a swing trading strategy that works requires hard work and many hours by the computer. However, once you manage to find one, you will be rewarded by your efforts. Very few have come to the stage where they have a validated trading strategy that they can use to make money in the market.

Just remember that no strategy lasts forever. The strategy you worked so hard to build will probably start to degrade as time passes by, and there is nothing you can do about it. The markets price changes all the time, and as a trader, you will have to adapt either by creating new strategies, or tweaking your current ones!

Step 3: Finding Good Stocks to Swing Trade

When it comes to swing trading stocks, you have a lot of different securities to choose from.

For example, if you’re trading the Russels 2000, you will have 2000 stocks to choose from, which is a lot.

However, a lot of these stocks won’t suit you and your trading strategy. Some might suffer from too low volume, and others might simply be in the wrong market sector.

Let’s have a look at a couple of things you should consider when choosing what stocks to swing trade!

1. Volume

It’s important to pay attention to the volume of the stocks you’re choosing for your swing. New traders, especially those with small accounts, tend to be attracted to stocks that trade for very little money. These stocks tend to have very little volume, and trading them you will experience a lot of slippage.

Slippage simply is when you want to enter a trade, but there aren’t any stocks for you to buy at the current price. What happens then, is that you have the pay a little more to find somebody that’s willing to sell their stocks to you.

In illiquid markets, which include penny stocks but other stocks as well, this could especially become an issue if you’re:

1. Entering with a large capital
2. Or want to get out of or in a trade at the same time as everyone else

The first point of course doesn’t apply to those with small capital, but the second point could become a hindrance. As we touched on previously, you want to limit your trading costs and keep as much of the profits for yourself. In that pursuit, slippage is something you want to keep as low as possible.

Due to this, you want to ensure that the stocks you trade have enough volume so that your orders will be executed efficiently, with as little slippage as possible.

2. The Market Sectors

Just because a stock is a stock, it doesn’t mean that all stocks work the same way.

Companies operate in different market sectors, and will behave differently depending on which sector they’re operating in.

For example, a company in the commodity sector will probably behave quite differently to a company in the financial sector, just to give an example.

You will sometimes find that some stocks aren’t compatible with your strategy, and as such you should consider removing them from your list of stocks to swing trade.

3. Volatility

Some swing trading strategies do better with high volatility. However, the opposite could hold true as well! If you know your trading strategy well, you should consider not to take trades in stocks that are in unfavorable volatility conditions.

Volatility is one of those concepts that are used extensively by many traders and works very well. So be sure to check it out!

The most common way to measure volatility is with the ADX indicator.

Use a Screener!

When looking for all these types of conditions to find the best stocks to trade at the moment, you’d better use a stock screener. We’ve already covered this topic, but it’s worth remembering that a stock screener can help with the whole stock selection process, and not only with finding the specific buy or sell signals.

For example, you could choose to scan only a certain list of stocks, or include a volatility filter in the scan.

Step 4: Executing the Swing Trades and Managing Your Trades

Once you know what stocks you’ll trade and have the strategy in place, the most exciting part begins. Now it’s time to execute the strategy and start profiting in the market!

In this section we wanted to share some tips on how to manage not only your trades, but also the risks that you take.

Let’s start!

Trade Many Stocks

As with any type of investing or trading, it’s good to be diversified. In swing trading, it’s better to spread out your risks on more stocks, than to only take a few positions.

In our experience, a portfolio where you only hold 3-4 positions could become a little unstable. It’s better to hold perhaps 7-10 simultaneous position if you want to achieve more stable returns.

Of course, you won’t have all your capital in the market all the time. Quite on the contrary, you’ll experience that there will be periods when you don’t get any signals. This is perfectly normal, and you shouldn’t rush into positions because of it.

One way of ensuring that you have a more even distribution of trades is to rely on different types of trading strategies. For example. the perfect match for a mean reversion strategy would be a trend following strategy. That way, when the market rallies and most stocks go up, your trend following strategy kicks in, while the mean reversion strategy gets active when the market rebounds.

Always use a stop loss!

It’s important that you always know your risk when entering a trade. As such you should always use a stop loss to limit your potential losses in the event of a market crash or other unexpected events.

For some strategy types, like mean reversion strategies, stop losses do harm performance, and some professional traders might even choose to not use them because of this.

As a beginner, you should still make us of a stop loss, but try to place it as far from the entry as you can afford. A mean reversion trade gets better the more the market moves against you. As such, ideally you wouldn’t want to cut a trade after it has gone against you, but keep it.

How Big Should the Stop Loss Be?

It’s hard to set a number that applies to everybody, since everyone has a different risk tolerance. However, as a general rule of thumb, you should make sure to not risk more than a few percents of your capital on each trade.

Keep a Swing Trading Journal

You should journal your trades and thoughts that arise in a special trading journal. This is crucial since it’s hard to get the bigger picture when acting on the single trade level.

By documenting your trades you can come back and find out what you have to work on to take your trading to the next level.

The trading journal has other benefits as well, of which some are related to trading psychology…

Step 4: Trading Psychology and Mastering Your Emotions

One thing that’s overlooked by many is the psychological aspect of trading.

Now, before you start trading yourself, this all might seem silly. The being in a drawdown and managing losses doesn’t seem that hard to handle. However, reality often is a completely different story. Many traders fail because they simply can’t stand the emotional pressures that are involved with losses and drawdowns.

Here follow some tips that will help you cope with the psychological pressures that you have to withstand as a trader!

1. Don’t Dwell on Your Losses

One tendency that many new traders have, is to dwell on the mistakes and losses that they made.

It’s hard not to, especially if your mistakes cost you a lot of money!

However, in trading, there is no point in dwelling on mistakes that belong to the past. Focus on future trades, since those are the only ones you can influence!

Still, you should always try to learn from the mistakes. Analyze them, and create new habits that will make it harder to repeat the same mistakes!

2. Accept the Returns the Market Gives You

New traders tend to be purely focused on the amount of money they’re going to make. And while this isn’t strange at all, it often caused a lot of angst if those performance goals aren’t met.

You should always do your best, but also accept that you might not get the returns you wished for, at least not in the beginning. If your only concern is to be as good as you possibly can, profits will soon follow.

3. Log your emotional State

You shouldn’t only keep trade-related data in your swing trading journal, but also try to comment on your emotional state and how you felt about a trade. Just as with the trade data, being able to go back to and see how your emotional state impacted your trading could be a real eye-opener!

Actually, keeping a trading journal is so important that it deserves its own heading!

How to Keep a Swing Trading Journal

Keeping a swing trading journal is one of the best decisions you can make! Your trading journal is an ongoing document where you take notes of how your trading is proceeding. It is an invaluable document that enables you to clearly see what you are good at, and where there is room for improvement!

Here is a list of some of the things that could be included in your swing trading journal:

1. A log of your trades.

This is one of the most common things to include. Many swing traders choose to log their entry, exit and time in each trade.

2. Your emotions

This is another very important thing to include. Did you experience any difficulties executing your swing trades? Use an index of 1-5 to specify how much you struggled with sticking to your trading rules.

Also, try to jot down more specific details. Maybe you weren’t in your best mood that day or had much to do outside your swing trading?

Could it be that some of these factors impacted your swing trading negatively?

Simply make quick notes of everything you find to be important!

3. Mistakes

Make quick notes of your mistakes and figure out what you could do to prevent them from happening again! If there was any specific reason why it was made, note that down too!

Common Mistakes Traders Make When Keeping Their Trading Journal

There are some things that you should be aware of when you keep your journal. Here are the most common ones:

1. Too Much Information

Keep in mind that your swing trading journal is something that you will be doing every day. It is understandable that you are enthusiastic in the beginning and choose to include a variety of statistics and information.

Don’t do that!

You want your journaling to take as little time as possible, while yet including the most important information. Otherwise, you will most likely grow tired of it quite soon and quit!

2. Only Including Mistakes

While you will make mistakes in your swing trading, you will also do many things right! Many new traders dive headlong into their journals as soon as they have made an error, which is exactly what they should do! However, once they make something right, they forget to write it down.

Don’t forget to journal your great moments! How are you going to make a correct analysis of your swing trading, if the journal is biased already from the beginning?

3. Not Reflecting on Experiences

A swing trading journal is not only about what happened in the past. Make sure that you reflect on what there is to learn from your experiences.

And don’t forget to write it down!

4. Too Vague Solutions

Once you have made a mistake, you want to take preemptive action and devise a clear plan. Don’t write things like “remain longer in trades” if your issue is that you exit too early. Isolate the problem and find clear solutions. Otherwise, the chances are that you will keep repeating the very same mistakes over and over again.

How to Make It Easier –How to get into swing trading

To round of this section about trading journals, we thought it would be nice to give you some tips on how to make it easier to keep a trading journal:

1. Make It A Habit

Make a habit of adding one journal entry every day by committing yourself to do so for at least one month. Ensure that the journal entry is the first thing you attend to every day so that you never run out of time. Another effective measure is to set a reward by the end of the month to stay focused and motivated!

2. Start Slowly

Put a time limit of 10 minutes that you never exceed. Do not try to write long-winded and extremely detailed entries. You will soon abandon the whole concept due to lack of motivation.

Furthermore, long-winded journal entries will make quick reviews of your journal very time-consuming. The longer and more complicated entries you make, the smaller chance of you finding the time to look it through later.

Remember, one of the reasons why we wrote a swing trading journal was that we wanted to review it later! Be concise and clear, and you will probably not have this issue!

2. Be Organized

Make sure that you have a solid and organized structure before you make your first entry. A nice structure will make it easier to scan through the pile of entries that your journal will become in only a few months’ time. As said before, try to stay as concise as you can!

3. Make It Fun

If you enjoy using software like excel, word or maybe a physical notebook, that is fine! However, for those of you who find that boring, switch to something more fun. There are tons of services that could be used to keep a swing trading journal. Here are some of the most popular services geared towards traders:

Edgewonk

Tradingdiarypro

Tradervue

tradebench

Final Swing Trading Tips

Now we are approaching the end of this guide, but before we go on to the conclusion, we wanted to share some final tips with you!

Let’s take them one by one!

1. Co-operate With Other Traders

Swing trading and trading in general is a lonely profession and hobby. Make sure to find other trades to collaborate with to exchange ideas and experiences. Quite often somebody else will have found solutions to the issues you are facing, and are willing to share those with you.

In general, traders are very generous with sharing their knowledge and experience as long as you give something valuable back to them! As such, make sure to connect with people that are around your level, so that everybody gets something from it!

2. Stick to the Rules You Set and Don’t Overtrade!

We spend a lot of time developing swing trading strategies for a reason!

Your edge lies in the rules that make up your strategy. As such it’s unwise to go against the rules you have set up for yourself.

This is easier said than done, especially if you’re in a big drawdown and feel the urge to do something about the situation. In such situations many people start taking trades that are not signaled by the trading strategy. Straying away from your strategy is not recommended at all, and will cost you quite a lot of money in the long run!

3. Learn Technical Analysis

While knowing technical analysis doesn’t make you a profitable trader on its own, you must use it if you want to build a technical trading system. Technical analysis is merely a tool to describe and quantify market behavior. As such, it’s possible to quantify both profitable and losing setups. This is a very common misconception among many beginning traders.

When it comes to what technical analysis you should learn, we recommend that you don’t focus on learning what every pattern means, as it’s mostly incorrect information. The only thing you should care about is how the pattern performs in your tests. Anything else is irrelevant.

Anyway, here are a couple of indicators and concepts in technical analysis that we know you will benefit from focusing on:

• The ADX indicator
• The RSI indicator
• Price patterns like candlestick patterns ( you can come up with your own)
• Moving average (Click and read our article about moving average)

If you want to read more, here is our massive article on technical analysis.

4. Backtest EVERYTHING Before You Trade It

The last tip is to never trade something if you haven’t backtested it yet. We ourselves time after time see how our ideas are proven worthless when tested. However, we don’t lose from trading such strategies or ideas, since we always make sure to backtest everything before we trade it!

FAQ – Frequently Asked Questions

1. Is it profitable to swing trade?
   Yes, swing trading can be profitable with the right trading strategies and money management. Most traders fail but that is most;y because they do not have a positive edge and risk to much on each trade.
2. Is swing trading a good strategy?
   Yes, swing trading is a good strategy. If you have a positive edge it does not normally take much time to trade and it is quiet easy to learn.

3. Is swing trading good for beginners?

   Yes, swing trading is perfect for beginners. It does not take much time and you do need to stay in front of the computer all day. Is is also much easier to learn.

4. What is the best time frame for swing trading?
   The best time frame for swing trading is usually between 1-4 days or 1-2 weeks, depending on the current market conditions and the trader’s risk tolerance.

5. What indicators are best used for swing trading?
   Some of the most popular indicators for swing trading are moving averages, Bollinger Bands, RSI, MACD, and Fibonacci Retracements.

6. What type of account is best for swing trading?
   A margin account is usually the best type of account for swing trading. This type of account allows traders to use leverage to increase their potential returns.

7. How much capital do I need to start swing trading?
   The amount of capital you need to start swing trading will depend on the size of your positions and the amount of leverage you use. Generally, you will need at least $2,000 to start swing trading.

8. What risks are associated with swing trading?
   The main risks associated with swing trading are trading too large of a position size, overtrading, and taking too many trades.

9. Is swing trading more profitable than day trading?
   It depends on the trader and their strategies. Some traders may find more success with swing trading, while others may find more success with day trading.

10. What is the best way to exit a swing trade?
    The best way to exit a swing trade is to use a predetermined stop loss order or take profit target. This will help to protect your profits and limit your losses.

11. What is the best way to enter a swing trade?
    The best way to enter a swing trade is to wait for a confirmed trend. You can enter the trade when the price action confirms the trend by breaking through a key resistance or support level.

12. Is it possible to make money swing trading?
    Yes, it is possible to make money swing trading. However, it is important to remember that trading is a risky activity and can result in losses.

13. What type of analysis is best for swing trading?
    Technical analysis is usually the best type of analysis for swing trading. This type of analysis focuses on the use of price charts to identify patterns and make trading decisions.

14. What are some common mistakes made by swing traders?
    Some of the most common mistakes made by swing traders are overtrading, taking too large of a position size, and not using stop-loss orders.

15. What type of trader is best suited to swing trading?
    Swing trading is best suited to traders who have the time and patience to wait for the right entry and exit points. Traders who are patient and disciplined are more likely to be successful at swing trading.

16. Are there any special strategies for swing trading?
    Yes, there are a number of special strategies for swing trading. Some strategies include trend following, range trading, breakout trading, and scalping.

17. What are the advantages of swing trading?
    The main advantages of swing trading are that it does not require traders to stay in front of the computer all day, it does not require a large capital outlay, and it has the potential for large profits with limited risk.

18. What are the disadvantages of swing trading?
    The main disadvantages of swing trading are that it requires a lot of patience, it can be risky if not done correctly, and it is time consuming to analyze the markets.

19. What is the difference between swing trading and day trading?
    The main difference between swing trading and day trading is that swing trading involves taking longer-term positions in the markets and holding them for multiple days or weeks, while day trading involves making many short-term trades over the course of the day.

20. What is the best way to manage risk when swing trading?
    The best way to manage risk when swing trading is to use stop-loss orders to limit losses and to never risk more than 1-2% of your capital on any single trade.

21. What types of markets are best suited for swing trading?
    Swing trading is best suited to markets with high liquidity and low volatility. Examples include stocks, commodities, currencies, and indices.

22. What type of news events should be avoided when swing trading?
    It is best to avoid news events that could cause high volatility in the markets such as central bank announcements, economic data releases, corporate earnings reports, and political events.

23. What kind of analysis should be done before entering a swing trade?
    Before entering a swing trade it is important to analyze the markets to identify the current trend and any potential support and resistance levels. Technical analysis tools such as trend lines, moving averages, and Fibonacci retracements can be used to help identify these levels.

24. What type of analysis should be done after entering a swing trade?
    After entering a swing trade it is important to monitor the markets to ensure that the trade is moving in the expected direction. Technical analysis tools can be used to help identify any changes in the trend and potential exit points.

25. What is the best time of day to enter a swing trade?
    The best time of day to enter a swing trade is when the markets are most active and there is increased volume and liquidity. This is usually in the morning or afternoon.

Last Words

In this massive article on swing trading, we’ve covered a lot of topics that we know are going to be useful for an aspiring swing trader.

The most important thing is to take it slowly, and not rush into anything. Observe what you create, and then use your observations to improve your process and swing strategies.

This is the by far most profitable approach and will save you a lot of money and angst in the long run!

Here you can find all our swing trading articles.

FAQ

What are the main types of swing trading – discretionary vs. systematic?

Swing trading can be categorized into discretionary and systematic approaches. Discretionary swing trading relies on trader judgment, while systematic swing trading involves using backtesting to validate strategies based on historical data.

How much capital is needed to start swing trading?

The capital required for swing trading depends on factors like transaction costs, stock prices, and risk tolerance. Generally, swing trading requires less capital compared to other forms of trading, and some traders can start with a few hundred dollars.

How do I choose a swing trading platform?

Choosing a platform involves considering factors like market data access, execution capabilities, and backtesting features. Platforms like TradeStation, Multicharts, and Amibroker are popular choices.

How do I build a swing trading strategy?

Building a strategy involves choosing the market, formulating a trading idea, backtesting, evaluating and improving the strategy, and validating it through out-of-sample testing.

How do I find good stocks to swing trade?

Selecting stocks involves considering factors like volume, market sector, and historical performance. Using stock scanners on platforms like TradeStation can help identify potential candidates.