How to Swing Trade Summary (C10): 5 Swing Trading Principles

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There are numerous strategies you can use for swing trading.

But before you learn them, you need to be aware of some underlying principles on which all good strategies are built.

Keep these in mind for whenever you create your own strategies.

With all the different types of indicators out there, it can be easy to get into analysis paralysis.

Trying to line up everything for the ‘perfect’ trade will probably end up in you not trading at all.

Conversely, and perhaps worse, is trading on every indicator without confirmation. This is overtrading and will eat up your capital.

Instead, find a couple of indicators that work for you and focus on them.

Swing trading is not gambling. It is a serious business and must be treated like one.

Dedicate some office space. Track your money. Pay your taxes. Set specific working hours. Do all the things you would do for any other business.

Even if you are only working part-time on your trading business, you need to set a proper routine.

Ideally, start and finish work at regular times (of your choice) and perhaps depending on when the market is open.

When you start work, review your portfolio, scan for new trades, open or close trades as needed and engage in continuous learning.

Set a schedule and routine to suit your lifestyle, and stick to it.

Your most important tool as a swing trader is your capital. You must protect it, and the way to do that is with risk management.

Always calculate your risk-reward ratio before entering a trade. That means you must decide your entry, stop-loss, and target profit.

Once you enter a trade, always set your stop-loss and target profit, and any alerts you want.

If you don’t get the entry price you need to get a good risk-reward ratio (at least 1:2), then don’t buy the trade. Keep your FOMO (Fear of Missing Out) in check. Put your emotions aside and follow your plan.

Always track your results and use the information to measure your performance.

At the very least, for each trade, record in your journal the ticker code, entry price, stop loss, target profit, entry price, and reasoning for entering the trade.

Regularly look over your trade history and analyse what is or isn’t working. Adjust your strategy accordingly.

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