What is swing trading?

Think of swing trading as the middle ground between high-speed day trading and slow-and-steady investing. It’s like surfing stock price waves-riding them for a few days or weeks to catch the best moves. 

If you love the idea of trading but don’t want the stress of watching charts all day, swing trading could be right up your alley.

Why do traders choose swing trading?

Unlike day traders, who are glued to their screens, swing traders take a more relaxed approach, checking in on trades a few times a week. The idea? Spot a trend, hop on early, and jump off before it changes direction.

Here’s why swing trading is a favorite:

• Less screen time: No need to stare at charts all day-just a few strategic check-ins.
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• Go with the momentum: Stocks love to move in trends, and swing traders take full advantage of that.
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• Bigger profit potential: Holding trades for days or weeks can mean larger gains compared to quick in-and-out day trades.
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• Lower stress levels: With fewer trades and more breathing room, swing trading is a more laid-back way to profit.
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• Fits your lifestyle: Manage your trades without messing up your daily routine.
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• Adds variety: It complements both short-term day trades and long-term investments.

Which Deriv account is best for swing trading?

Your choice of account can make a big difference in how smoothly your swing trades run. Since you’re holding trades for several days or weeks, here’s what Deriv offers:

• Financial Account: Designed for stock-focused traders with tighter variable spreads.
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• Swap-Free Account: A great choice if you want to avoid overnight financing fees (wider spreads apply).
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• Zero-Spread Account: Ideal for high-volume traders who prefer no spread costs but are okay with commission fees.

How to swing trade like a pro

Successful swing trading isn’t about luck-it’s about strategy. Here’s what you need:

• Use technical indicators: Watch price charts, support/resistance levels, moving averages, and volume indicators.
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• Find great entry points: Enter when a stock bounces off support, breaks out of a pattern, or moving averages cross.
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• Have an exit plan: Take profits near resistance, use trailing stop-losses, and set risk-reward targets.

Swing trading example: Apple (AAPL)

Many traders use the Fibonacci Retracement tool to find good entry and exit points. Let’s say you think AAPL is about to bounce higher:

• Buy at: $220 (38.2% Fibonacci support level)
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• Sell at: $235 (recent high)
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• Stop-loss: Below $215 (50% Fibonacci support level)
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These technical levels can help guide your trade, but remember-no strategy works 100% of the time, so always double-check your setups.

Risk management for swing traders

• Position sizing: Keep risk at 1-2% of your capital per trade.
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• Stop-losses: Set them below recent support for long trades or above resistance for short trades.
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• Market analysis: Check the overall market trend, sector performance, and any upcoming news that could shake things up.
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• Keep a trading journal: Track your trades, decisions, and lessons learned so you can improve over time.

Mistakes to avoid

• Ignoring stop-losses (seriously, don’t do this!)
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• Averaging down on losing trades (it’s a recipe for disaster)
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• Trading without a plan (winging it rarely works)
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• Overtrading in a choppy market (sometimes, less is more)
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• Letting winners turn into losers (secure profits when you can!)

Practice makes profit

Swing trading takes patience, strategy, and practice. Instead of diving into live markets right away, try a free Deriv demo account. It’s a risk-free way to test strategies, refine your skills, and build confidence before you trade real money.