What Is Swing Trading? Your Guide to Short-Term Profits

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What is swing trading? And why is it essential for your trading success? Many people don’t understand the nuances between swing trading, day trading, investing, and other important words that we need to define carefully.

I’m D.R. Barton, and I help people learn how to invest wisely. Whether that’s answering fundamental questions like, “What is swing trading?” or providing a list of my latest stock picks, I’m highly in tune with my audience.

Through this blog, I’m able to answer some of the most strategic questions I hear and show people what I’ve learned about working the stock market to my advantage. Instead of sitting on this knowledge, I want to put it into the hands of as many people as possible.

So, what is swing trading? And why should you care? Let’s take a closer look.

What Is Swing Trading?

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Swing trading means executing trades of a specific stock or other security, such as currency pairs, over a short period of time. In some cases, swing traders hold stocks overnight. In others, the pattern might play out over a few days.

What is swing trading? It’s a way for you to maximize small, short-term gains so you continue to grow your investment account. Instead of waiting for years and taking dividends to finally sell off a few lots of blue chip stocks, you execute multiple trades to maximize each one’s profit potential.

The great thing about swing trading is that small losses don’t have to ruin your day. You might lose 20 percent on one play and earn 120 percent on another. I’ll take 100 percent profit any day, even if that means losing on a trade that went against me.

What Is Swing Trading Versus Day Trading?

The only difference between swing trading and day trading is the amount of time that passes. Think of day trading as a compressed version of swing trading. You’re looking for different stock patterns and different conditions.

As a swing trader, you need the confidence to hold your position overnight when you know that news out of China or the Middle East could ruin your play. It takes courage, but when you have the right information, you can swing trade profitably.

One advantage of swing trading over day trading is that you don’t have to micromanage your plays. Instead of watching a stock chart every second for two hours, you can live your life and allow your stop-loss orders and other infrastructure to help you stay profitable.

What Is Swing Trading Versus Investing?

I’ve already answered the question, “What is swing trading?” Let’s break this down further and identify the difference between trading and investing. Too many people use the words interchangeably.

A trade is a short-term play on a security designed to take quick profits. Whether it’s day trading or swing trading, you don’t want to own a piece of a company for any extended period of time. You’re not banking on the upward trajectory of an Amazon or an Apple stock.

Investing means buying into a company at a certain percentage for the long haul. You trust that company to continue building brand equity even though there might be a few dips along the way. Further, you’ll accept dividends throughout the life of ownership as an income strategy.

What is swing trading? It’s not the opposite of investing, but it’s a different way to approach securities.

What Is D.R. Barton’s Best Advice for Swing Trading?

The D.R. Barton brand is built around education. The reason I answer questions like, “What is swing trading?” is because I enjoy helping people find their way.

My best advice for swing traders is to paper trade first. Get some experience under your belt before you put your own money at risk. Lots of paper trading services exist through many trading accounts, and the more education you have, the better you’ll perform.

If you’re looking for a shortcut, you can rely on publications like Stealth Profits Trader to take your swing and day trading skills to the next level. I cut out all the stuff you don’t want to learn and show you how to profit wisely.

How Can You Improve Your Swing Trading Skills?

Practice makes perfect, right? The more you practice swing trading, the better you’ll get. Make sure you keep a trading journal so you know exactly what trades have been profitable and under what conditions. Remember, the stock market works on patterns.

A golden play you made six months ago might repeat tomorrow. You’ll recognize the pattern, which will allow you to look up the play in your trading journal and refresh your memory of your exact moves. How large was your position? How long did you hold that position?

You can also improve your swing trading skills by watching other people do it successfully. Whether that means watching YouTube videos of investors trading live or following my publications, you need that expert insight to help you remain consistently profitable.

What Do Stock Charts Have to Do With Swing Trading?

Stock charts are visual representations of a stock’s price action. What is swing trading in terms of stock patterns? It’s identifying the upswing for long positions or downswing for short positions that will enable you to predict the next boom — or crash.

Picture the trajectory of a ping pong ball as it bounces across a table. That’s often what a stock chart looks like to a swing trader. You want to buy in at the lowest point (resistance) and sell before it reaches its next level of support. Alternatively, you might hold through several swings if you see support trending upward.

Do You Need a Separate Account for Swing Trading?

If you’re interested in swing trading on a regular basis, you might want to open a second trading account for that purpose. It’s easier to keep track of your plays when you’re not watching multiple types of investments in the same account.

That said, it’s not a requirement. Swing traders often go back to day trading and vice versa. Keeping one account active is all you really need to succeed.

Conclusion

What is swing trading? It’s the practice of holding onto positions for short time periods. You won’t make $1 million in a week, but you can slowly grow your trading account as you continue to execute.

I’m D.R. Barton, and I’d like to personally invite you to subscribe to The 10-Minute Millionaire. You’ll learn more about day trading, swing trading, and even options trading. I’d love to share my years of experience with you so you don’t have to suffer the losses that are so common in this industry.

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