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 a good fit for your trading approach.

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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 favourite:

• 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.
  
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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.
  
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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.
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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.

Common mistakes swing traders should 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 (often leads to poor results)
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• Overtrading in a choppy market (sometimes, less is more)
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• Letting profitable traders reverse into losses (secure profits when you can!)

Practice makes profit

Swing trading takes patience, strategy, and practice. Before you trade live, 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.