Want to invest in Stock Market? But don’t have time and skills, try SWING TRADING

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Swing Trading- Are you someone stuck in a 9 to 5 job and want to invest in the stock market? Don’t have time for that? Are you a housewife with lots of responsibilities at home, wanting to trade In the stock market but don’t have any idea how to do so?  Are you a youngster, who wants to start an Investment journey  early so that you could  enjoy the benefits of compounding? If that’s the case Let’s start a journey of investing and trading in the stock market with swing trading.

What is swing trading?

 The stock market seems very complicated and very risky.  it becomes very difficult for a beginner or a newbie to decide which stock to invest,  which strategy to apply,For how long or what time frame, whose advice  to take seriously , etc.?  Such questions keep  boggling the mind of an investor and the   confusion created  refrains him from even entering the stock market.

 No, What is a solution wherein, we could spend very less time,  avoid risks, and gain heavy profits in the market.  The answer is swing trading.

 Swing Trading is a style of trading in which we try to capture short term to medium term gains in a stock for any other financial instrument over a period of a few days to a  few weeks. In simple terms, We invest in the stock for 3 months to  2 to 3 years To get profits.

 We as swing traders  utilize Fundamental analysis and technical analysis to invest in a particular stock .Popular form of active trading In which traders look to capture a chunk of expected price move and then move to the next opportunity.

Swing trading strategies

Different traders use different strategies,  but here I use a daily chart  pattern. Most common patterns that I follow are moving average crossovers, cup and handle patterns, Head and Shoulder patterns. I observe a daily candlestick chart pattern, To find out moving average crossover or if cup and handle is formed in some pattern or Head and Shoulder pattern is formed.

I work with a full fledged trading plan in hand. Before trading I very well know, at which point I will buy, and at what point  I will move out of the trade. I know beforehand how much  gain I expect from this trade .The only thing which is unknown  is the time it will take to reach my target. If you observe closely, the prices of a stock always move in a zigzag pattern. These patterns are called Swings.

Even if the price goes down afterI have bought it, it or goes up after I have sold it, makes no difference to me. I just have to wait for the target to be achieved without thinking about how many times the stock is going up while the stock is going down. Once again repeat the target and the profits are always pre decided.

Steps of swing trading. Image courtesy Tradingview.com

Steps of Swing trading:-

  1. Pick a stock–   the first step is to pick  stock of a fundamentally sound Company. A company that has been making consistent profits in the past,  has delivered good Returns, Further scope of growth. For this we need to do fundamental analysis which we will discuss in later  blogs.
  2. Analyze its chart– We can analyze the chart for patterns like moving average crossover, cup and handle pattern, Head and Shoulder pattern etc. We should also understand by seeing the chart how it has performed historically.
  3. Set up an entry and exit point–  on the basis of chart analysis, if you find any opportunity, we can Set up an entry point as well as the target exit point According to the pattern formed. Also help us calculate the gain percentage we will achieve once this trade is over.

Important- The price of the stocks  may go down once we have bought them, we are never going to use Stop loss. No Stop Loss. Invest only that amount that you won’t be needing in the next 5 years. Stock market doesn’t work like FD, it is bound to go up and down . We just have to practice patience.Stock market is always volatile.

Look at the chart again:-

  1. We selected a fundamentally sound and profitable company GILLETTE
  2. We are working on daily candlestick chart
  3. We saw a Cup and Handle Pattern
  4. Buy Price could have been: 6233
  5. Sell Price could have been:6971
  6. Profit percentage: 12%
  7. Although stock price would have come down but we don’t have to put a stop loss and sell , rather hold it. It may take time and come up and we will have profit of 12%. Now remember here there is a luck game also, we bought the stock and its price came down , have we been more lucky we could have bought at lower levels as well. In later blogs we will discuss this luck factor also.

Advantages of Swing trading

  • It is less risky when we are trading in upward trending markets.
  •  we don’t have to close The trade on the same day .
  • We don’t have to track the market all day long By sitting in front of a computer. We can track the market even after the trading session is over .
  • It is a simple stress free  strategy  and Beginner friendly.

Read – How to find multibagger stocks.

Disadvantages of Swing trading

  • It may take a long time to book the profits, if the stock has entered consolidation phase or down trend.
  • Need to do fundamental and technical analysis before trading a stock. 

 Difference Between swing trading and day trading

  1. In day trading the holding period of a stock is just one day.  we have to buy or sell on the same day Even if we are facing loss  but in swing trading we can sell according to our choice so always in profit.
  2.  We have to spend the entire day sitting in front of computers and tracking the market. While in swing trading we can track the markets even after the trading sessions are over.

In upcoming blogs we will learn fundamental analysis, technical analysis , strategies etc.

Frequently Asked Questions

What are swing trading stocks for September 2022?

There is opportunity to invest in following stocks in September 2022
1. Vaibhav Global
2. Lux Industries
3. Mphasis
4. Gland Pharma
5. Indigo Paints
6. Geojit Financial Services, etc.

What are swing trading strategies?

There are many swing trading strategies like:-
1. Reverse head and Shoulder Pattern
2. Cup and Handle Pattern
3. 52 week High and Low Pattern
4. Highest Ever Results, highest Ever Price Pattern

What analysis should be done before investing in a stock?

Before investing in a stock one should understand company’s business model, do fundamental analysis and then look at the charts for opportunity to buy and selling targets. this is called technical analysis. By doing this kind of study investor gets a conviction in the stock and it can hold it even if the stock slides down after buying.

Use the link to open demat account in Zerodha

Also read

  1. Can you tell me anything to change my mind about quitting the stock market for good?
  2. How to select stocks for investing in 2022. How to select great companies for investing for beginners.
  3. Zomato targets to break even by the second quarter of FY24.
  4. Coal India Ltd, buy or sell
  5. Market capitalization-Which companies qualify to be in my portfolio?
  6. Avenue Supermarts Ltd| DMart | A high-growth company with an opportunity to invest
  7. छोटी-छोटी आदतों से खुद को सुधारें
  8. Power of subconscious mind. Explanation .आपके अवचेतन मन की शक्ति|व्याख्या हिंदी में| Treasure house within you| आपके अंदर निहित खजाना| Chapter 1

Books recommended

Power of Subconscious Mind by Dr. Joseph Murphy

आपके अवचेतन मन की शक्ति

Books on Investing

Rich Dad Poor Dad: What the Rich Teach Their Kids About Money That the Poor and Middle Class Do Not!

Rich Dad Poor Dad: What the Rich Teach Their Kids About Money That the Poor and Middle Class Do Not!

Learn to Earn: A Beginner's Guide to the Basics of Investing and Business

Learn to Earn: A Beginner’s Guide to the Basics of Investing and Business

one wall up wall street

One Up On Wall Street: How to Use What You Already Know to Make Money in the Market

The intelligent Investor

The Intelligent Investor

Disclaimer- All investments and trading in the stock market involved risk. Any decision to place trade in the financial markets, including trading in stock should only be made  after thorough research. Trading strategies or related information mentioned in the article is for informational purposes only. Use your due diligence before investing.

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