How To Start Swing Trading?

The stock market provides you with different avenues with the kinds of investments. Swing trading is one of the interesting forms of investments. But, how to start swing trading in the first place?

Before we know how to start swing trading, we need to understand this form of trading.

Swing trading is a good way of earning money in the short to intermediate-term if you have mastered the art carefully. As the name suggests, swing trading is earning profits with the help of swings coming at stock prices in both directions i.e. up and down.

In order to master swing trading, there are some things that you would need to learn and practice.

Also Read: Swing Trading Vs Day Trading

Let us take you through some of the basics of swing trading.

The first thing is the selection of stocks for swing trading. You should focus on selecting those stocks which are volatile and show good price movements in a short span of time.

You would not want to invest in a very stable kind of stock the price of which does not move frequently. Then, you would have to check the liquidity of the stock as well.

This is very important because if the stock is not liquid, then, it may become extremely difficult to enter and exit from the position of your trade.

Then, you would be required to know the basics of technical analysis of a stocks. You need to know how to read technical charts and have knowledge of different kinds of technical indicators.

You should know how to use technical indicators to understand entry points as well as points at which you shod exit from the trade.

Another important thing to note is that no matter how much knowledge you have gained and how much experience you have, there is bound to happen in some trades when the stock prices start moving in an unfavourable direction.

In such cases, you should take a small stop loss and exit out of the trade to protect yourself from huge losses. Before initiating any trade, you should have a pre-defined stop-loss that needs to be followed with great discipline.

In reading technical charts, understanding support and resistance levels are the most important thing.

The resistance level is that level on a chart where the bearish forces start overcoming the bullish forces and stop the stock price from moving further up.

The support level is that level on a chart where the bullish forces start overcoming the bearish forces and stop the stock price from moving further down.

These levels are useful in understanding trends and reversal of trends. If the price movement is accompanied with large volumes in trades, it can be safely assumed that the trend is going to reverse and a position can be entered into.

There are different strategies for swing trading that swing traders use in order to earn good profits.

They use different kinds of technical indicators and oscillators to determine when the price movement is going to happen in a particular direction.

You should choose your own strategy as per your preference and risk-taking capacity. Now you might find all these concepts difficult. Right? 

Well! if you are serious and want to take your trading journey to the next level than begin your journey by referring some of the best swing trading books.

How Much Money Needed to Start Swing Trading?

Well, there is no single right answer to this question.

While you are looking to start swing trading, you need to understand the implications associated with this form of investment.

As a basic mantra of investments, it makes sense to keep 5% to 10% of your overall trading account balance for swing trading. In other words, let’s say, if you have a trading account balance of INR 1 Lakh, then you can out 5k to 10k into your swing trading kitty.

Having said that, there are a few investors who primarily perform this form of trading and may go as high as 50% to 70% of their overall account balance for swing trading.

Although there is nothing wrong with that, it needs to be understood that such traders have a reasonable amount of swing trading experience and most likely they know what they are doing.

If you need to get to that level, it makes sense to learn how to start swing trading and then perform the way you want to.

There is a stock market education app named Stock Pathshala which provides many stock market-related courses and a lot of good quality structured content on stocks.

There are audio podcasts, interesting articles and videos on it. Also, there is a special course on technical analysis and one on technical indicators and oscillators which could be very helpful to you while learning swing trading. You should definitely check this app.

Furthermore, if you are looking to get started with stock market investments, let us assist you in taking the next steps ahead.