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Swing Trading: Making A Profit

Unless you are one of the few people who buy into the stock market just for the dividends, you likely are interested in making a profit by trading without the securities market. Though fundamental and daily trading are two ways to do this, swing trading is a less risky way of trading. The reason is that day trading involves trading within a day or two of acquisition of stock, but swing traders hold onto their investments for several days to several weeks as they survey the market to determine how recent economic events will affect the price of their stock, thus allowing them to trade when it is most profitable, or at least when a downward trend is less likely to create a major financial catastrophe.

Because of the process of swing trading, this type of trading is more likely to be profitable for the new trader who has not yet gained enough experience to know what stocks to trade before seeing how events are going to affect the price. At some point in the future, a swing trader may decide to join the ranks of the fundamental trader or day trader, but as he is learning the way the market trends flow, swing trading is his best option in order to lessen potential risk. Too many variations exist within the market for a new trader to know how those economic changes will affect the price index of the stock exchange markets.

If you are a risk-taker, you may choose the more risky fundamental trading from the beginning, but you have to understand that as a new trader, making errors in judgment is likely to give you a sense of failure if you should make a poor decision that costs you money. Even if you can afford to lose in the market, that loss of momentum has the potential to create havoc for the future. No one wants to take a loss, even when they can afford it, so make sure that before you take chances, you have enough education and information to make an informed choice rather than just guessing. A bad decision may not affect just you because in the market people make many decisions based upon those of others. In other words, if other traders see you selling, they may do likewise, and if you made a poor decision, you caused other people to do the same. Stay informed, stay educated, and do not take risks until you have enough experience to make a well-informed choice.

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