Pros and Cons of Swing Trading
Index 1. Swing Trading 2. 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.
Pros &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 ď‚— Swing trading does need continuous monitoring. You can
make use of stop losses. ď‚— 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 ď‚— Generally speaking, trades need time to provide bigger
profits. ď‚— 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 ď‚— It doesn't really go away. Just like any other trading style,
swing trading has the potential to result in substantial losses. ď‚— 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 ď‚— Swing trading involves holding trades overnight. With
this, margin requirements tend to be higher. ď‚— Maximum leverage is twice the amount of your capital.
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