7 Common Mistakes Swing Traders Make (And How to Avoid Them) (2024)

FAQs

7 Common Mistakes Swing Traders Make (And How to Avoid Them)? ›

Golden Rules

NEVER, ever, average a loss! Sell out if you think you are wrong. Buy back when you believe you are right.

Golden Rules

NEVER, ever, average a loss! Sell out if you think you are wrong. Buy back when you believe you are right.

The main reason 90% of swing traders don't make a profit from their efforts is that they don't take it seriously enough. They open an account, read a few articles, and try and dive right in. Learning swing trading is an ongoing process that should never stop.

Studies show that the number one mistake that losing traders make is not getting the balance right between risk and reward. Many let a losing trade continue in the hope that the market will reverse and turn that loss into a profit.

Don't have a trading plan (every trade is a mistake). Wrong position size or don't have a position sizing method. Taking too many correlated positions (increases risk…as the correlated trades are essentially the same). Got out of a position before the planned exit.

The 1% risk rule means not risking more than 1% of account capital on a single trade. It doesn't mean only putting 1% of your capital into a trade. Put as much capital as you wish, but if the trade is losing more than 1% of your total capital, close the position.

The 3% rule states that you should never risk more than 3% of your whole trading capital on a single deal. In order to safeguard themselves against big losses, traders attempt to restrict exposures on a single deal.

The average salary for a Swing trader is ₹1,00,000 in New Delhi, India.

The holding period for a typical swing trade falls somewhere between two days and two weeks. Of course, there are exceptions where some trades are held for longer periods of time – but we'll talk about that later on. For now, let's focus on the average holding period for a swing trade.

What is the most profitable trade ever? ›

The best trade in history is often considered to be George Soros's shorting of the British Pound in the early 1990s, making over $1 billion. This trade, along with others by notable investors, involved highly leveraged currency exploitation.

Most new traders lose because they can't control the actions their emotions cause them to make. Another common mistake that traders make is a lack of risk management. Trading involves risk, and it's essential to have a plan in place for how you will manage that risk.

Though Swing trading suggests long-term strategies, thus your timeframe will reflect this in the price movement. As per the market experts, the best Supertrend settings for swing trading are usually the 4-hour and 1-day charts that you can use in combination with the default 10,3 Supertrend line.

Perhaps the most widely used example is the relative strength index (RSI), which shows whether a market is overbought or oversold – and therefore whether a swing might be on the horizon. The RSI measures the number and size of a market's positive and negative closes over a set number of periods (usually 14).

The Swing Trading strategy can lead to profits in the short term, usually in the range of 10% to 30%. However, as most things investing usually are, it is a risky bet. About 90% of traders report losses during trading.

Swing trading is a trading strategy that involves taking trades that last a few days up to several weeks in order to take advantage of price swings within a larger overall trend. It is a popular approach among active traders who seek to capitalize on short-term market movements.

Swing trading strategies can be aided by using candlestick charts and oscillators to identify potential trades. Oscillators track momentum and help identify reversals when they begin to diverge from the existing trend.

Bottom Line. The Swing Trading strategy can lead to profits in the short term, usually in the range of 10% to 30%. However, as most things investing usually are, it is a risky bet. About 90% of traders report losses during trading.

Generally swing traders work with a 1:2 Risk Reward Ratio or higher.