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When people look for trading suitable for novices, it is best to look up swing trading for beginners. With a slow-paced form with good profit potential, swing trading is ideal for beginners. Especially considering that it is much easier to start with swing trading than any other trading form. 

So, let's delve into the world of swing trading for beginners.

Swing Trading For Beginners - Table of Contents

What is Swing Trading?

Swing trading is a short-term trading option where trades are held from 1 day up to a few weeks. Swing traders rely heavily on technical analysis to form strategies that they use to understand the best time to enter and leave the market.  

What do you Understand by Swing Trading?

Generally, swing trading for beginners holds a position that is as short or long as one trading session. But this also lasts up to a few weeks. Although the general timeframe is a few days to a few weeks, some trades might last for a few months. Traders still consider them as swing trades. The main goal of swing trading is to catch a major chunk of the potential price move. While some traders want volatile stocks with some movement, others prefer more peaceful stocks. In both cases, swing trading identifies where the asset price will move next, enter a position and then capture the chunk of profits as the move materializes. 

What are the Advantages and Disadvantages of Swing Trading?

Advantages of Swing Trading

To understand swing trading for beginners, let's take a look at the pros:

  • You can trade part-time: Swing trading is perfect for those with time limits. As most swing trading strategies exit their trade the same day it opens, you do not need to be glued to your computer screens all day. It takes 15 minutes to scan the stocks on your 'to buy' list and place your order for the upcoming trading day. 

  • Less Stress: You can swing trade easily while working a full-time job. This means you can handle making money every month as you get your paycheck and profits from swing trading. This also impacts your decision-making as you are more relaxed. 

  • You do not need much investment: You can start swing trading with a few hundred dollars. All you need is a trading computer and some tools.

Disadvantages of Swing Trading

Of course, there are some cons to swing trading for beginners as well: 

  • Can be difficult to understand in the beginning: Even if swing trading is the easier trading form, there is quite a lot that you still need to understand. 

  • You can lose money: Like all other types of trading, there is a good chance you could lose with swing trading. Even if you have a foolproof trading strategy, nothing is 100% secured. 

  • You cannot diversify: Swing trading does not allow for diversification. If the market dips, so will your stocks, and if it increases, so will your profits.

What are the Types of Swing Trading?

Swing trading for beginners can be categorized into two - systematic swing trading and discretionary swing trading.

  1. Systematic swing trading is when the trader follows the market's ups and downs and makes their investment based on the analysis of the market.

  2. At the same time, discretionary swing trading is where the trader decides based on the current market scenario. In the case of systematic trading, current conditions are not valued as much as during discretionary trading.

What are Some Swing Trading Strategies?

Just like other trading opportunities, swing trading strategies fall under the following categories:

1. Mean Reversion Strategies: 

In this strategy, traders assume that the market over-exaggerated movement to either side, which is then corrected through a reversion to the mean. This means that the market swings around the average. 

2. Trend Following Strategies: 

This strategy works in the opposite to mean reversion. Where the mean reversion strategy suggests an overextended market that will revert, a trend-following strategy suggests that the market will continue its direction in that momentum. These strategies work, but finding edges that rely on momentum logic is more challenging. 

3. Breakout Strategies: 

Similar to trend following, a breakout strategy works with a breakout level. Once the stock advances over that specified level, it signals that the market is strong enough to continue in that direction toward a breakout. 

4. Pairs Trading Strategies: 

When you enter positions in two stocks in the same sector, that is normally correlated with one another. You stay short in one stock and long in the other as your strategy suggests that the correlation is weakening. 

5. Sector Trading Strategies: 

In this type of sector trading, you aim to identify the strongest market sector. Once that happens, you can pick individual stocks that match that criterion.

Does Swing Trading Have Any Examples?

The best example of swing trading is when a trader analyzes Amazon stocks and determines when to buy or sell. 

The above candlestick chart showcases the 'cup and handle' pattern, where the cup is u-shaped, and the handle points downwards. This pattern is considered to be bullish. 

If swing traders want to profit from Amazon, they will purchase the stock at the top of the cup or the price of $3,555. They should then place a stop-loss order at the low in the cup handle ($3395). So, the risk or maximum loss in the trade is $160 ($3555-$3395 = $160). With the recommended reward/risk ratio of 3:1, you can sell at $480 ($160 X 3 = $480) or $4035 ( $3555 + $480). 

Swing Trading vs Day Trading

The main distinction between swing and day trading is the holding time for trade positions. Swing trading involves overnight holding, whereas day traders close their positions before the market closure. By holding overnight, swing traders incur the unpredictability of the overnight risk gaps. Although, by taking overnight risks, swing traders are done with a smaller position than day traders. Swing traders also have access to leverage or margins of 50%.

For example, if the traders get approval for margin trading, they only need to put $25,000 in capital for trade with a current value of $50,000. 

Most Successful Swing Traders

Some of the most successful swing traders that beginners can follow are: 

  • Mark Minervini
  • Dan Zanger 
  • Paul Singh 
  • TraderStewie
  • Peter Brandt
  • Michele - Tradeonthefly.

Is swing Trading Profitable?

Swing traders tend to earn more profits per trade as they ride the swing in prices for longer periods. Although there is more risk involved with swing trading as the position is left open for hours, there is some risk when the profits are higher than in normal trading. 


When planning swing trading for beginners, the most important aspect is to remember not to rush. Observe what you are creating, and then use your analysis to improve the process and swing strategies. 

This approach will save money and time in the long run!

About Author

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Founder & Managing Director of Investor Diary

I, Vishnu Deekonda, am dedicated to providing the proper financial education to every individual interested in becoming financially independent through intelligent investments.

I have trained people to build financial independence and observed people had got many myths about investing for beginners. I want to prove to such individuals that these myths are the bottlenecks to a successful trading portfolio. I wanted to share the knowledge I have gained through a decade of experience with the people willing to build a healthy stock return with less or no risk.

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