Are you interested in swing trading? We get it. You want to make money, and you’ve probably heard that swing trading is the most popular way for options traders to make extra income.
In short, it is. Swing trading is the method of options trading that we see the most and tends to work the best for consistent account growth over time.
So, what is swing trading?
In our common trading terms list, we define swing trading as when an options trader buys an options contract with the plan to sell it at least one day later.
So all you need to do is buy an options contract and hold it for at least one day, right? Wrong. You need a plan of attack if you want to buy options contracts and swing them successfully.
Benefits of swing trading vs. day trading
- Swing trading requires less time during the day if you chart well and set alerts.
- Swing trading revolves mainly around good technical analysis.
- You don’t need to worry about the PDT rule.
- You have access to Margin.
- It’s slightly less risky since you’re typically buying contracts with expiration dates further out.
The New Swing Traders Toolkit
We recommend starting with a paper trading account if you’re new to swing trading. Why? Because you need to develop a few tools before risking your money.
Tool #1: Develop a strategy
Every good swing trader has developed a trading strategy that works for them. You need to decide which charts you like to use, what patterns you like, and learn how to do technical analysis for each trade.
You’ll need to learn which indicators you like, how to set up support and resistance lines, what patterns to look for, and other fundamentals to craft your strategy.
Tool #2: Get Your Emotions In Check
The best traders aren’t emotional. Letting your emotions dictate your trading decisions is the best way to lose constantly.
Tool #3: Risk Management
I’ll likely write a whole blog on risk management, so for now, all you need to know is this. Develop a risk management strategy and stick to it! If your strategy is to cut your losses when you’re down 15%, do it every single time. No excuses. Listen to the strategy you developed when your emotions weren’t controlling you. Learn more by watching this course Max made on the topic.
Tip #4: Paytience Pays
If you have good technical analysis, you’ve stuck to your strategy, and feel confident, then wait. Don’t overtrade. Don’t panic sell your position. Just wait for the right time and collect your profits.
Swing Trading Tips For Success & Profit
Some of Max’s best tips on swing trading may sound pretty simple but believe me when I say, many traders don’t listen and then blow up their accounts.
Tip #1: Go With The Market
Align your swing trade with the market direction. If the market is going green, don’t be the trader who thinks they can short it. Stay with the market direction. Trade the trend.
Tip #2: Trust Your Technical Analysis
If you’ve done good TA, trust it. You’ve likely learned how to do good TA from more successful traders, so your fundamentals should be sound.
Start looking for your entrance when you see a nice strong breakout, good volume, and low volatility. Try to pick the best entry point based on your indicators and support and resistance lines. If you can predict what price your ticker will bounce off of, you can enter right around that price and likely make some good profit.
Tip #3: Create A Watchlist
Figure out which stocks you like and watch them like a hawk. By keeping an eye on only 5-15 stocks, you can chart them effectively. Once you’ve set up great charts, you can set alerts so you know that you can get in with a swing trade when the price hits a specific number.
What Does A Swing Trader Typically Make?
Max often says, “$200 per day keeps the day jobs away,” and it’s reasonable for a good swing trader to make an average of $200 per day with intelligent trades based on sound technical analysis.
You may not make $200 every day since you’ll be holding your trades, but you can easily average $200 per day in profits over a few weeks.
What Happens Next?
After reading this, I hope you feel more confident about day trading. I highly recommend taking a few additional steps before day trading for yourself. Take Max’s free course on swing trading, take a coaching session to sure up your knowledge and strategies, and join our Discord so that you can access our knowledge and trading support 24/7.