Online trading is a growing and fast-developing concept. It allows the traders to trade on different markets, invest various amounts of money and apply different strategies in attempt to earn money. One of the strategies is swing trading. It can potentially bring high earnings to traders, which is why it is one of the most commonly used techniques.
What is swing trading and how it works?
Swing trading can be used on various markets. However, the traders usually apply it when trading on the stock market. In a way it is similar to day trading, because it also deals with short-term trades and takes the advantage out of small fluctuations in price. But the difference is that day trading involves positioning which lasts at least two days. Typically, it takes two to six days, but it can be as long as two weeks. During this time, the traders can identify the general trend and then capture the profits with swing trading strategy.
This approach is also applicable on binary trading. What’s more, it can be used regardless of the market you prefer for your binary trading sessions. You are required to determine the trends in the market of your choice and then trade the options on short-term expiry periods. Automated robots, like Top 7 Binary Robots, also determine the trends in the market and use the findings to make the best out of every trade.
One of the most obvious advantages is that swing trading can bring a substantial amount of earnings. If you learn how to analyze the market and predict the changes, you can make significant amount of money if you practice swing trading. Then, a good side is that it does not have to occupy all the time you have. As a matter of fact, many swing traders also have a regular full-time job and the trading does not disturb it. This is because the trades remain open for several days, so there is no need to monitor the changes from minute to minute.
Since swing trading does not require you to be at the trading platform all the time, it means that it involves a lot less stress than day trading. You can have time for other activities and your day job, and you do not have the risk of burnout. Also, it does not require large investments, so you can be relaxed from the financial side as well.
Just like with other trading types, the risk of loss is present in this case as well. It is smaller than with the day trades, but it still exists. It is especially risky if you invest large amounts of money, and if you trade on highly volatile markets like Forex.Another disadvantage is that margin requirements are much higher with swing trading.
If you compare it to day trading, for instance, you can see the difference. With day trading, maximum leverage is typically around four times the trader’s capital. With swing trading, it is two times smaller and it is around 2 times the capital.