The key ingredient in successful trading is patience. In today's world of "fast food", "drive through", "get it now" type of environment very few people have the essential patience that can make them successful in their trading careers. In my opinion a lot of people due to their impatience want to make a big profit immediately and start with trading short-term techniques like scalping. I think one needs to start with a longer term trading techniques like swing trading. First it much simpler to execute and it develops necessary patience. Besides that there are few other advantages of swing trading.
1. Pay less in spreads
All people know that most brokers do not charge commission per trade but what they charge is a spread. It's a difference between buy and sell prices. Those who practice scalping know that to make a good profit you need to execute a high number of trades. So if a trader works with a currency pair that has 3 pips spread and he executes 20 trades then he is already short of 60 pips. The profit target in scalping is around 10 pips. On the other hand swing trading based on a daily chart requires executing very few trades with profit target usually being over 100 pips.
2. Low level of noise
If you trade short term then you have to use lower timeframe charts. The lower the timeframe the higher the noise level. I met some scalpers who use 1-minute charts. On charts like that everything looks like buried in noise. The longer-term techniques like swing trading require 4 hour or even daily charts. It's much easier to spot the right price pattern on those charts than on 1-minute chart.
3. Effective emotional control
When you have to monitor continuously your trade it drains out your emotional energy very quickly. I think you are familiar with the emotional roller coaster of observing price to fluctuate for and against your trading position. With the swing trades you need to monitor you trade for very little amount of time. Many swing trading techniques are based on analyzing the charts at the end of the day. Even though emotions are still involved it's not like with scalping. The intensity is much lower.
4. Being able to trade part time
Many people come to trading to make quick money on the side. They may not realize that it will require effort and hard work. But the best option for them is to go with swing trading. As I mentioned before it requires very little of your time to monitor your trades. However it does require large amount of time to study the market and educate yourself on trading.
Swing trading requires patience though. It may require even more patience than other trading techniques. One trade may last a few days for some swing trading systems. Some days you may even have no trades. But the benefits of developing patience and discipline will be fabulous for your trading outcome.
Albert Schmidt is a part-time currency trader. After quite a long time of struggle he learned to make consistent profit trading in Forex. Review a trading strategy he successfully uses in his trades. |
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