There are three main styles of investing: Day trading, swing trading, and long term investing. Before we discuss the benefits of swing trading, let's do a brief overview of the three styles.
Day trading, if done correctly can achieve the best percentage returns for your account over any time period. It's possible to make huge returns on your trading account in a matter of hours. However, there is a large capital requirement, it requires you to sit in front of a computer for hours watching your trades, and can be stressful. If you're not trained, it is by far the riskiest form of investing since you're typically getting involved with the most volatile stocks on the market every day.
Buy and Hold
“Buy and hold” investing is at the opposite end of the spectrum, as you're just buying once and holding for months or years. Very little stress, it can generate a consistent passive income, and there are plenty of competent financial intermediaries you can put your funds in to generate consistent returns. However, your funds are illiquid and the returns are much smaller than if you day trade or swing trade that same amount of capital correctly. You're also usually delegating the responsibility of your returns to someone else, and are letting someone else take charge of a significant portion of your net worth.
Swing trading is the perfect balance between these two styles of investing. It can yield better gains that are more liquid than most styles of long term investing, and it allows you to take control of the returns of the capital you chose to invest. Swing trading is much less stressful and has lower barriers to entry than day trading. Below are some ways swing trading can help you improve your trading returns no matter what type of investor you are.
Your Day Trades Will Be Better
If you're a day trader, learning how to swing trade will significantly improve your intraday trading. A key component of successful day trading is understanding what is happening intraday in the context of the daily time frame. Many day traders make the mistake of taking an intraday setup on a daily chart that does not support their bias. Swing trading will help you more accurately assign probability to a intraday setup, as you will better understand the bigger picture trend of the stock.
Here is a video going into more depth on this topic:
Your Long Term Investing Will Be More Precise
Swing trading will teach you how to better time your entries to catch longer term trends. If you're a “buy and hold” investor, learning swing trading will teach you how to get better entries to increase your returns on your investment. Even if you're correct on the overall trend of a stock over 10 years you can increase your returns by improving your timing. Swing trading will teach you how to analyze a daily, weekly, and monthly chart so you can improve your entries and exits. It will also teach you how to add to your winning investments to increase your gains, and also cut your losing investments to decrease your losses.
If you're interested in learning more about swing trading, the head of our swing trading program, Paul Singh, is doing a free webinar this Thursday, November 16th. He will be giving you actionable trends for swing trading for the last couple months of 2017 to substantially grow your trading account. Reserve your spot here!