Author : Omar Bassal
I wish I could tell you that swing trading is fast and easy and leads to overnight profits that will make you an instant millionaire. Just buy my five CDs today to discover how you can swing trade to massive riches! Or attend one of my training conferences coming soon to a hotel near you: “How I Swing Trade in My Bathing Suit!” (Film cuts to a testimonial from an “actual” client wearing a Hawaiian T-shirt: “I’ve tried the Omar Bassal Swing Trading Technique [this is patented, of course] and I made more than $5,000 on one trade alone!”) Okay, back to reality. Swing trading isn’t going to lead to overnight wealth. Period. Anyone who tells you different is either lying or has made an incredibly risky trade that turned out positive by the grace of God. You can go to Las Vegas and bet $10,000 on the color black at the roulette table and possibly double your money (your odds are slightly less than 50 percent). But is that a sound plan? Of course not. And it’s no different when it comes to swing trading. At best, as a novice swing trader, you’ll produce market returns in line or slightly above the overall market. If you’re really besting the markets, it may be because you’re taking an inordinate amount of risk that may eventually wipe away your account assets. And even as a stellar swing trader, expect to produce returns of 20 percent or possibly 30 percent annually. (If you want quick profits, first make sure you’re an impeccable market timer, and then look into day trading.) Unlike day traders, swing traders hold positions over several days and sometimes for a few weeks. But similar to day traders, swing traders rely heavily on signals from chart patterns and technical indicators to time their entries and exits from securities. The goal of swing trading is to profit from short but powerful moves on the long side (buying) and short side (selling) of the stock market. Swing trading also differs from the buy-and-hold approach to investing. Long term investors may hold a security through periods of weakness that may last several weeks or months, figuring that the tide will eventually turn and their investment thesis will be proven correct. Swing traders don’t care for such poor performance in the near term. If a security’s price is performing poorly, swing traders exit first and ask questions later. They’re nimble and judicious in choosing potential opportunities.