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Swing trading is a long-term trading style that requires the patience to hold the trades for several days at a time. Below are some Pros and Cons of Swing Trading.
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Index • Swing Trading • Pros and Cons of Swing Trading • Pros of Swing Trading • Cons of Swing Trading
Swing Trading • Swing trading is a longer term trading style that requires the patience to hold the trades for several days at a time. • It is specially for those who can’t monitor their charts throughout the day but can dedicate a couple of hours analyzing the market every night. • Below are some Pros and Cons of Swing Trading.
1. No Need To Be A Full-Time Job • The first two requirements for trying swing trading are knowledge and investment capital. • As a swing trader, For the whole day, you wouldn’t need to be attached to the computer screen. • It is mostly because you now have a longer timeframe; having days to weeks as opposed to minutes to hours.
With this, you can trade while also maintaining a separate full-time job. • Make sure that you don’t continually check the trading screens while at work.
2. No Need For Monitoring • Swing trading does need continuous monitoring. You can make use of stop losses. • It ensures that you won't be losing too much in cases when the market goes against your way.
3. Great Potential For Significant Profits • Generally speaking, trades need time to provide bigger profits. • Keeping trade open for a longer period of time will have a higher probability of providing higher gains than trading in-and-out of single security multiple times a day.
4. Does Not Require Expensive Investment • You can use swing trading with a single computer and conventional trading tools. • You don’t need to have a state-of-the-art technology of day trading.
1. Risk of Substantial Losses • It doesn't really go away. Just like any other trading style, swing trading has the potential to result in substantial losses. • Swing traders hold positions longer than the day traders which means that there also a bigger risk of incurring the larger losses.
2. Higher Margin Requirements • Swing trading involves holding trades overnight. With this, margin requirements tend to be higher. • Maximum leverage is twice the amount of your capital.
