There are two types of traders – those who make quick trades and scalp the profits along the way and those who are more patient with their trades and are okay with holding their positions overnight, for days or even weeks in order to maximize their profits. Swing trading takes a lot of grit and discipline because there is always the temptation of locking in small gains in the fear that you might end up losing everything by waiting. However, the swing trader must lose focus of the bird that is in hand and go for the ones that are still in the bush.
The difference between swing trading and day trading
The main difference between swing trading and day trading is the timeframe. A day trader typically sits on his computer all day and makes several trades in the day. The day trader is mostly a scalper because they are looking for 1%-3% gains on the trades. The idea is to make several trades at tiny percentage gains but then compound the overall gains to make a reasonable percentage gain on the account at the end of the day. On the flip side, swing traders place traders that they are not looking to close in less than 24 hours. The goal is to make as much as 20%-50% gains on a single trade. Swing trading is, therefore, less time consuming, less stressful and ultimately more rewarding.
How to avoid losing money on swing trades
Swing trading should never be an excuse for greed because greed is the main reason why people lose money on the markets. As tempting as it might be to try hitting a home run in every trade, it is more practical to settle for first or second base. Set reasonable targets before placing a trade and take it close to your trades once the targets reach. In order to set a reasonable target, you will need to study the charts to understand how the pair you are trading with behaves. For instance, if there is no evidence on the chart that the coin you are trading in gets a 50% in a couple of days, it would be unreasonable to expect that to happen any time soon. As a swing trader, you must study the history and trends on the charts and expect the history to repeat itself. FOMO is another reason people make poor traders. For you to be a successful swing trader, you must be willing to wait until you have the best entry into a trade. Don't jump on a trade just because it is gaining momentum and everyone is talking about it.
Anyone who has tried swing trading will tell you that it is an emotional rollercoaster. However, if you have a good trading system and have the discipline to stick to it, swing trading will reward you for your patience. For most beginners, the notion of buying low and selling high makes trading look extremely simple. But once they plunge into the crypto trading environment, they soon discover that there is much more to trading than merely buying low and selling high. In order to be a profitable swing trader, you must have the discipline to stick to your trading system no matter what.