Can you get rich swing trading?

Can you get rich swing trading?

When it comes to trading, there are many strategies that a trader can use. However, none comes close to swing trading. Swing trading offers the possibility of very high returns with minimal risks.This therefore prompts us to wonder, is it ...

When it comes to trading, there are many strategies that a trader can use. However, none comes close to swing trading. Swing trading offers the possibility of very high returns with minimal risks.

This therefore prompts us to wonder, is it possible for one to get rich swing trading? The good news is that you can. There are a few people who have been able to make lots of money swing trading. However, it is reported that a vast majority who try swing trading end up losing money.

Therefore, in as much as it is possible to make money, it is also not easy. To be successful at swing trading, you need to study and practice the art of trading in stock markets as well as have good money management and discipline skills.

Before diving any further, lets first get to know exactly what swing trading is;

Swing trading involves buying and selling of stock within a timeframe. Could be a few days or weeks. The aim here is to resell the stocks at a profit during the ‘swing.’. The process requires uttermost patience and sobriety while making decisions. This is because sometimes, the swing duration might take longer than usual and if you get anxious, you are more likely to make impatient decisions.

Factors to consider before getting into swing trading

In as much as this business might sound easy, it is not. Trading has never been easy, that is why those who take it lightly end up losing their money in the process.  

Before you decide to start stock trading here are a few things you need to consider;

Financial situation

Getting into swing trading with the mentality of making money fast is a sure recipe for disaster. As mentioned earlier, swing trading requires you to put your best foot forward. You need to be able to make sober decisions. Therefore, if you are at a position where you feel you need to make instant cash, then swing trading is probably not a good idea for you at the moment.  

Experience level

Swing trading has become a popular stock trading strategy that is used by millions of stock traders. Therefore, if you want to be able to compete with the big fishes of stock trading, you need to equip yourself with adequate knowledge about the stock market. In this trade, you will always be in competition with millions of other traders therefore, for you to be able to stand a better chance at succeeding you need to know what you are doing and be consistent at it.  

Commitment

There are a bunch of swing traders who think they can get away with downloading software to help them  monitor the stock market. What such traders fail to understand is that swing trading is more of a mind game therefore you need to be fully committed to it. The only way to become rich from swing trading is by investing your time to master the skill; this will help you know when best to engage in trade to make the maximum profit and when to sit it out to avoid making losses.

Plan

Just like everything else in life, you need to have a solid swing trading plan that you trust enough to be willing to bet your money on. Trading in the stock markets sometimes may feel like a roller coaster; sometimes you are high up making profits while other times you are down there losing money. You need to be able to trust your plan during both times.

With a proper strategy, a trader can be able to make anything from 10-50% per year. This is a relatively good return since the market average is usually about 10%.  Take for instance Warren Buffet, he has for a long time been involved in the business of stock trading and is reported to be getting 20% returns per year on trade.  

There are several factors that will influence the amount you can make swing trading. They include;

How much you invest: the more money you risk, the higher the profit you are likely to make or rather losses you are likely to incur (it can go both ways).

Opportunity: trading in many stocks increases your chances of getting higher returns.  

Strategy: your ability to follow your laid down strategy will greatly influence your success with stock trading. If you tend to deviate from your strategy, you are more likely to end up incurring losses.

How much money do you need to start swing trading

Well, there is no minimum amount required to start stock trading, the decision is entirely based on your situation. Among different individuals, there are several things that come to play when determining the amount of money to invest in stock trading. They include;

Stock price: the price of a stock can range anywhere from as low as a few pennies to as high as thousands of dollars. If you are not looking to invest much capital, you will want to forgo trading on the expensive stocks to maintain your risks at an acceptable level.

Risk acceptance: your risk per trade should not be more than a few percentage of the total amount left in your account balance.  This helps to avoid the risk of running into drawdowns that are not easy to recover from.  

Commissions: always aim at keeping your commission and transaction costs at minimum. The costs of commissions will depend on the type of cost structure you settle on. If you are lucky, you might be able to get yourself a broker who does not charge a commission fee hence this will be a non-issue to you.

In Conclusion

The topic on stock trading is wide and a bit more detailed.  However, you can always purchase learning materials on swing trading from experienced traders in the form of eBooks or read website articles related to swing trading to learn more in detail.

Nevertheless, it is safe to say that swing trading is a straightforward and easy technique. With the right money discipline and management skills, you will be able to make good returns from this venture.