A swing trader is the type of investor who trades between the low and the high end of the market, either selling low or buying high at certain times of the day. You don’t have to be in front of the curve – you could even trade from the bottom of your trading range to the top, using this technique.
The goal is to gain or lose profit during the day in either direction, and when you make a profit, you can trade even again the next day!
Swing Traders are used most often when they expect a short-term advantage and then sell or buy during a high-pressure period. Because of this, they are often referred to as ‘risk-takers’ or ‘tickers’, which makes their movements very erratic.
While this makes them difficult to forecast and stop, it also means that they can be extremely profitable if they are patient and plan ahead.
In short, swing traders aren’t ‘buyers’ at the top and ‘sellers’ at the bottom. They are in it to win!
The reason why the market swings every day is that it represents volatility, and volatility gives us liquidity. Without this, there would be no need for any type of trading strategy.
Because the market swings, so therefore, do our profits and losses. In order to get a more accurate view of what percentage you are making, it is important to look at a number of different markets before committing to a trading strategy.
How does your trader compare to other traders?
A good trader will compare their performance to what other traders are earning – or not earning. Some market-makers have a large number of positions – meaning they are able to sell at all times and take profit on the lowest price that they can.
These traders, while sometimes profitable, are often more vulnerable to trading losses than those who stick to lower-priced options. A trader who is making small profits that are being passed on to other traders can make a great profit during the day, but will likely not experience as much profit as the other traders due to the high volatility of the market.
While it may be fun to try and trade in these positions, it takes more work and will not produce the same return as if you were trading options. This can also help explain why traders on high-risk trading strategies such as futures and options are able to pull out of their moves when it gets too tough to get higher than the current market price.
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