Swing Trading / Short term positional Trading
What is swing trading
Swing trading, also known as short term positional trading, is trend following trading technique that involves an investment period 1-2 weeks and a target of 3-10%.
Benefit of swing trading
In swing trading investment period are 1-2 weeks and no need to constant monitoring like intraday trading. Swing trading target is 3% to 10% and with a good moment we increase our target and trail as per our risk-reward and stop loss is not more than 3%.
How swing trading is different from day trading
How to identify good swing stock
Swing trading we see below parameter for indentify good swing stock.
- Identify trend.
- Good volume support.
- Support of good momentum indicators like (MACD + SUPER TREND).
- Level confirmation like (PIVOT + HIGH LOW).
Strategy and example
At trader guide we provide good swing strategy with inbuilt Risk-reward. We consider confirmation of trend + Volume + Momentum indicator + Candle size provision + Level.
Above strategy, we identify Mindtree for next week with favourable Risk-Reward. Today close at Rs.479.20 stock is up only 3% and stop loss is 464 with target of 3% (493) to 5% (503). Other technical parameters are also positive like MACD and Super trend with good volume support.
Trading discipline required in swing trading
Trading discipline is must in any kind of trading. In swing trading target is 3% to 10% and with a good momentum we increase our target and trail as per our risk-reward and stop loss is not more than 3%. Within a month if we executed 5 trade which 2 trades hit stop loss @ 3% and 3 trades give an average profit of 5% than the net earnings is as under. Capital is Rs. 1, 00, 000. Each trade with Rs.50,000.
After deducting stop loss amount, brokerage and slippage, an average monthly return of 4% can be expected. Most of professional and service class people need and are using this kind of trading system to earn good money from this kind of swing trading. If consistency is good than yearly return can be close to 50% with moderate risk-reward.
- Anand Singh Gaur
- Sunil Kothari