What is a Swing Trader and how can you become one?
Let us start by defining the word swing trader. A swing trader is someone who trades stocks and holds their positions for longer than a single day. Most swing trades look for bigger gains rather than a day trader who look for a quick gain and takes quick profits. For example, a day trader might takes $.50 in a stock that he was in for 10 to 30minutes, whereas, a swing trader will hold that position for a 6 to 9 point gain in 4 to 8 days. Of course these prices and time frame vary. I have seen some day traders make as much percentage in a day as a swing trade would make in a couple of days. It all depends on how you are comfortable in your trading.
The first thing you want to do in becoming a swing trader is finding which stock to trade. Large cap stocks are usually the best to trade because they are very easy to get in and out of the position. They are have some of the biggest moves because stock traders will move with the momentum adding more momentum to the stock and the direction it is moving towards. For example if you look at the stock ticker symbol AMZN on 3/21/11 on the daily chart, you start to see the stock starting to move higher. Here a swing trader would start their position and ride it till they start seeing a top which was around the $184.40 range. If you could have rode this, you could have made around 22 points.
Another thing you want to look at is keeping an eye out for a bear market and bull market. When the bottom hit on the US stock market it became a strong bull market and many swing traders rode it all the way to the top. The bull market is what many trader look for because it is an easier way to decided what the stocks will do. In a bull market this means that the stock market is strong and going up.
Now that you have some knowledge about it, how do you become a swing trader. Well first you are going to want to find a good online stock broker that will be able to give you good commission rates. Second you are going to want to have good stock trading software and scanners. I like to use Think or Swim and TD Ameritrade for my swings because it is easy to execute the order and the charts are good. What I like about them, is that they are customer friendly and are always willing to help out with any questions. Lastly, set up all your charts the way you want to them to be, as far as moving averages, pivot points and other technical indicators.
Being a swing trader is great because you don’t have to constantly be looking at the chart and you are always shooting for bigger gains. Make sure you pick large cap stocks and you follow through with your game plan. Try to find a momentum in the stock market and always be on the look out for bear and bull markets.
