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What are the Best Tips for Day Swing Trading?

Article Details
  • Written By: A. Leverkuhn
  • Edited By: Andrew Jones
  • Last Modified Date: 10 October 2018
  • Copyright Protected:
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Some of the best tips for day swing trading involve using caution in an overall approach to investing. In addition, traders and beginning investors can benefit from having a practical sense of what’s involved in this speculative activity, and how to use the various tools that can help them improve their trading tactics. It’s important for the individual investor to understand that day swing trading is extremely subject to price swings and volatility that can leave them with big losses.

One of the biggest overall tips for day swing trading is to limit risk exposure. Those who want to really understand this extremely short-term form of investing can observe some of the seasoned professionals who engage in day trading publicly, advising clients, and making their short-term speculations very visible through instructional DVDs and other materials. As beginners get a better grasp on the way that financial trading works, they will understand that hardly anyone wants all of their investment money to be in short-term things like swing trading. They can also get practice with an activity called “paper trading” that involves making theoretical trades to test the waters.

A very basic piece of advice for this sort of trading is to limit the amount of overall capital invested. A beginning investor might put 10% of their total capital in day swing trading. That way, if they make some bad short-term decisions, their risks and losses will be limited.

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Some take this strategy another step further. Keeping cash in a conventional savings account doesn’t really earn very much. Some beginning investors like to take a more sophisticated approach, building a diversified portfolio. For example, someone might keep 25% or 50% of their capital in municipal bonds or some long-term investment based on interest gains, putting an additional 25% into other funds like index funds, and using the remaining percentage to engage in day swing trading in order to try to get some quick gains.

As they use their limited capital for day swing trading, investors can profit from using good background research to pick stocks that have a potential to gain quickly. Looking at some tools like Bollinger bands, predictors of price fluctuation in the short-term, can really help a trader who is focused on day-to-day buys and sells. Beginners can also get better results by learning about special purchase orders, trend analysis, and all of the other nuts and bolts tactics for picking stocks that are likely to rise within hours rather than months or years.

The fact is that day swing trading is something that takes a lot of media research. Lots of traders get better results by staying at their desks during the trading day and monitoring prices. It’s also important for beginners to understand the advice of expert financial professionals; according to many sources, the majority of day swing traders tend to lose money over time. The best advice is to tighten up your portfolio, limit your risks, and make smart and cautious choices in day swing trading and other forms of short-term speculation.

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