Swing Trading Made Simple (Part II)

By Ahmad Hassam

In case of currency trading, the cost of trading is hidden in the bid/ask spreads offered by the broker. Day traders often rake up major commissions charges if they are trading stocks which makes it that much more difficult to beat the overall market. In the end, if you are unable to breakeven, you cannot survive long in day trading. So the more you day trade, the higher your trading cost will become.

Swing trading also entails facing stiff trading cost. These trading costs come in the shape of spread in case of currencies or commissions per each trade if you are trading stocks. But these trading costs are nothing as severe in swing trading as in day trading. Price action spans several days to several weeks in swing trading. Market fundamentals can come into play to a larger degree in swing trading as compared to day trading.

Day to day currency movements are due less to market fundamentals and more to short term supply and demand of currencies or shares. Swing trading can also generate higher potential profits on single trades because the holding period is longer than in day trading.

There is a misconception that day trading can be taken as a hobby. Day trading demands lots of attention and time commitment from you. It is stressful and a winning position can turn into a losing one within seconds. You have to have strong nerves, if you want to permanently take on day trading.

Swing trading with an eye on earning additional income or improving the returns on your portfolio is less stressful than swing trading for a living. Currency markets are open 24/5. You can trade anytime of the day. You can enter or exit a position even late hours. Swing trading currency markets can be very profitable. Now the good thing about swing trading is that you can take it full time or part time.

Part time swing trading means doing market analysis when you get home from work! After you have done your analysis and made your trading plan, you can implement trades the following day! You can enter stop loss orders to protect your capital even though you may not be able to watch the market all day. You should first go through this phase of part time swing trading first if you eventually want full time swing trading.

Swing trading part time is suitable for you if you have a full time job but can devote a few hours a week to analyzing markets and securities or currencies. You should have a passion for financial markets and short term trading. If you are achieving subpar results in your current investment portfolios from your financial advisors or third party then you can take up part time swing trading.

Part time swing trading is for those individuals who are not gamblers and dont take undue risks like doubling down their positions. They should also have the discipline to consistently place stop loss orders. Again swing trading is not for fun.

By swing trading instead of day trading, you are able to commit less capital to the markets to reach extraordinary gains. At the end of the day, when it comes down to is the fact that you need to determine your trading style before you become serious in trading. - 23196

About the Author:

Mr. Ahmad Hassam has done Masters from Harvard University. He is interested in day trading stocks and currencies. Know Swing Trading. Learn Forex Trading!