Anyone can invest in a mutual fund through a 401(k)-retirement plan. Usually, their employers do it for them. And sadly, that’s often the extent of most people’s investments. They never learn how to properly invest or to take hold of their financial destinies and become millionaires.
Even though the S&P 500 has been experiencing record highs lately, people are still not investing in the stock market. In fact, as of 2018, only about 52% of Americans own stock, which is down from around 65% before the Great Recession of 2008.
As someone who wants to secure their financial future, you know that it takes more than a mutual fund investment and mortgage. You want to learn how to make real profits that will sustain you for the rest of your life and maybe even be passed down to your children and grandchildren. One of the ways to make actual wealth is through swing trading.
Before you start swing trading, you must learn all about it. You need to be prepared to study up – perhaps for months on end – and be patient.
What Is Swing Trading?
Swing trading is a type of fundamental trading where you hold positions for more than a day. If you’re not aware, fundamental trading is when a trader will look at company-specific factors to decide whether or not to buy or sell a stock. For instance, if it came out that a major profitable corporation was acquiring a smaller company, a trader might decide to buy up shares of the smaller company based on that news.
Most fundamental traders are considered to be swing traders, since changes in corporate fundamentals usually require many days or a week to cause price movement that will result in a decent profit. In the case of the merger, it may take up to a week for the prices to actually go up on the market. Other fundamentals include company earning reports, negative publicity for companies, and revealed balance sheets.
Sometimes people get confused between swing trading and day trading. Swing trading has elements of both day trading and trend trading. Day traders trade stocks all within one day. They may hold onto a stock for a few seconds or up to a few hours, but they don’t hold it more than a day. A trend trader will look at the long-term fundamental trends of stocks and indexes and might not sell for weeks or months at a time. With swing trading, traders will keep stocks for a few days or maybe even up to three weeks, and they’ll trade based on optimism and pessimism or its intra-month or intra-week swings.
Those who are best at swing trading have the ability to predict where the market is headed. It’s not ideal to trade in an extreme bear or bull market, but rather when the market is gradually going up and down. This is when traders can profit from up and down movements in the short-term.
Why You Need Patience to Be a Swing Trader
Since swing trading is a little bit like day trading, you need to have the patience to master the art of it as well as your feelings toward it.
A day trader who gets caught up in making profits every single day is going to double down when he starts losing. He’s going to sweat and make bad decisions. He’s going to get angry and frustrated and let the natural ups and downs of the market take him down.
Those who do swing trading have to be the exact opposite. They must master their feelings and exercise patience. They need to understand that the market is going to bounce back and that you can make your money back… and then some. If they can just calm down and be patient, knowing that it is possible to profit big, they will.
Another reason why patience is especially critical with swing trading is because you can’t buy and sell shares in the same day like a day trader. You need to wait it out. During the time that you hold onto your stock, you need to study charts to decide when to sell. You need to see how the markets are going so you know when to sell and profit the most.
You also need patience when learning how to interpret patterns. For instance, a lot of people doing swing trading will use candlestick charts to make educated predictions. On candlestick charts, you’ll see candlestick formations, which demonstrate the high, low, close, and open of an asset’s price over a certain period of time. Candlestick charts will show you what happened over a year, a month, a week, a day, or even the past five minutes.
You will see the high price of a candle on the upper end of the top shadow. The body of the candle highlights the variations between the opening and the closing, the low is at the end of the shadow on the bottom of the candle, and the various colors show whether the opening price was higher or lower than the closing price. If candle bodies are shorter, this means there was restricted price movement. If they’re longer, it shows a huge pressure to buy or sell. Long wicks signal volatility.
Candlestick charts are just one way to interpret the market. There are plenty of other ways you can learn how to successfully do swing trading, but only if you are patient.
How to Start Swing Trading
After doing your research and learning how to analyze the markets, you may want to start swing trading. Before you begin, you should look into the various venues you can do it on, which include the futures, options, stocks, and forex markets.
You also need to have at least a few thousand dollars in your trading account to make any real profits (most analysts will tell you that $5,000 to $10,000 is the sweet spot). Plus, you should risk less than 2% of your account capital on a single trade. Always have a stop-loss order in effect as well. This is an order that will allow you to exit from a losing position at a certain price.
Instead of jumping right into swing trading, it’s best to begin betting with paper trades. A paper trading platform lets you do simulated trading. This way, you can see how you’d perform in an actual real-life swing trading situation. Hopefully, you’ll discover that you’re a patient, calm, and smart trader who knows how to profit big.
Once you think you’re ready, you’ll need to sign up for a platform you can begin swing trading on. When finding a platform, look at the fees for trades. For instance, or Ally costs $3.95 per trade and E*TRADE charges $6.95 per trade. Don’t just base your decision off the fees, though. See what kind of analysis they offer because it could be worth the extra money to access better information.
You should also sign up for Ten-Minute Millionaire, which will help you maximize your gains with swing trading.
Ten-Minute Millionaire will put you on the path to making your first million dollars. Run by financial expert and New York Times bestselling author D.R. Barton, Jr., Ten-Minute Millionaire will give you advice on best practices for swing trading, as well as information on which investments are going to pay off big for you. Using proven algorithms, Barton analyzes the market and then delivers his findings right to your inbox. All you have to do is open your emails, read the messages, and start making your profitable trades. Pretty soon, if you keep taking Barton’s advice, you can be on your way to becoming a millionaire.
If you want to become great at not only swing trading but investing and working the markets to your benefit in general, subscribe to Ten-Minute Millionaire today. You won’t regret taking the first step to safeguarding your assets, securing your financial future, and guaranteeing that you and your family will be financially stable for generations to come. What are you waiting for?