Advantages of Swing Trading

By Barry Burns

Swing trading is a lot like day trading, but its differences bring some unique advantages. Swing trading provides benefits for people who have restrictive work schedules and also for those who need more time to make trading decisions.

  • Swing trading can be a good trading style for people who work during market hours but still want to be active, relatively short-term traders.

    You can day trade and swing trade at the same time. During market hours, focus on your day trading and don’t get distracted by your swing trading positions. To facilitate this, place your swing trades the night before the market opens (or premarket).

    Evaluate the price at which you want to enter a trade and place a buy stop at that price. If your trade is filled, immediately place your protective stop (some trading software will allow you to place multiple orders based on if/then scenarios, or you can do it manually).

  • Although overnight risk can be a disadvantage of swing trading, the gaps that sometimes occur overnight can also work in your favor if they gap in the direction of your trade. This allows you to make quick, big, overnight money not available with day trading.

  • Swing trading allows you to take more time to analyze the market you’re trading and make trading decisions in a more relaxed manner without the time pressure of day trading.

    Many swing traders are people who have tried day trading but found that they didn’t like “staring at a monitor all day,” finding it tedious and boring.