When it comes to trading, it’s important to remember that rewards are often proportional to risks. The more you risk on a particular position, the more your potential reward will be. The downside, of course, is that high-risk traders often end up losing more money than low-risk traders.
So if you want to make a decent amount of money on trading, without putting your capital at high risk, then you should become a swing trader. Not only do swing traders make a decent amount of money on their trades, but they also have certain qualities that make them more confident, and therefore, sexier than other traders. Here’s what you should know about them.
1. Swing Traders Are Patient But They Also Want Big Rewards
Swing traders are medium-risk-medium-reward traders. They may not be as safe and secure as position trader (who rely on long term price actions to make money) but they also get better potential rewards without taking on high risks (which is what many day traders do).
A typical swing trader is willing to hold a position for a week or two, which is often more than enough time to realize profits. Likewise, if the trade goes wrong then the swing trader will be able to control his losses by leaving his position before it could get worse. This trading approach is what makes swing traders more profitable in the long run,
2. Swing Trading Combines Courage and Strategy
Swing trade strategies combine require careful planning with strong nerves. Unlike day traders, who are barely different from gamblers, and position traders, who rely on low risk, low reward strategies, swing traders, combine sound strategy with calculated bets.
Like day traders, swing traders rely on timing to generate returns on their investments. Timing a position just right requires both discipline and good nerves, and traders who rely on such strategies must quickly react to any sudden changes in the market.
Unlike day traders, though, swing traders don’t just rely on market sentiment. Like position traders, they also look at the facts, and this combination of careful planning and raw nerves is another reason why swing traders are sometimes sexier than position and day traders.
3. Swing Trader Are Focused
Swing traders rely on concentration more than any other type of trader. Unlike day traders who rely on luck and position traders who rely on long term price actions, swing traders monitor the price actions of their investments to make profits. This allows them to react quickly to sudden changes in the market, without being blinded by either fear or greed, which is a common problem among day traders.
Swing trading is the middle ground between ‘safe’ and sober approach of position trading and the high risks of day trading. In order to be a successful swing trader, you will need to be both smart and courageous. You will also need a plan for managing your portfolio as well as your emotions. If you can do these things then you will be a successful swing trader in no time.