Swing trading strategy is very popular for the intermediate and advanced traders. Even the professional traders use this system to execute long term trade in favor of the market trend. Unlike day trading swing trading requires a huge amount of time and patience. Not only this you must have very precise knowledge about this industry if you want to become a professional swing trader. Today’s article will focus on the mistakes that the retail traders make while using the swing trading system.
Setting up extremely wide stop loss
You will be trading the market in the longer time frame this doesn’t mean that you will have to use wide stop loss without any logic. Instead of placing 100 or 200 pips stop you should do some technical analysis and find the key support and resistance level of the market. Based on the key support and resistance level you should place your stop. If possible learn the reliable candlestick pattern so that you can easily place your trade with precise stop loss and take profit level.
Not having an exact exit point
The new swing trader’s think that the market will always go in favor of them and trend is will never change. But in reality setting up the exit point is very crucial for all swing trader. If you think that this market remains in favor of a certain trend then this swing trading system will wipe your entire trading account. Even the long term established trend of the market often gets changed. Being an active participant in this industry you need to have the ability to identify the trend reversal. And try to use the trailing stop loss features so that you can maximize your profit potential without risking too much.
Adding position to a losing trades
This might sound logical to the novice swing traders. But once a certain trade is gone wrong for 100 pips there is very little chance that the market will retrace back 100 pips. So if you place a new open position then you are just increasing your risk exposure. At times you will be able to make a double profit by adding a position to the losing side but considering the long term scenario you are actually putting your trading capital at risk. Always open one single order in your online trading account to minimize your risk level.
Not doing the multiple time frame analysis
Multiple frame analysis is one the key element to becoming successful at swing trading. Without assessing the different time frame it’s really hard for you to determine the actual price movement in the longer time frame. Being a swing trader you might think that exact entry point is not necessary but if you look at the experienced professional then you will notice that they even care for single pip in this market. Most importantly multiple time frame analysis will also help to filter out the false trading signals.
Setting unrealistic expectation
The rookie swing traders often live in their dream world. They simply think to make a big winner from a single trade. But you need to stay concern about your rational profit factor. If you set your take profit by using your dream number then chances are very high that the trade will hit your potential stop loss. Always set reasonable expectation according to your account size and trading skills.
This is a very serious point yet we are telling it you in the last. Most of the swing traders have a huge lack of their trading knowledge. Swing trading is only for the professional. You can’t make any real progress if you trade the market without having a précised knowledge of this industry. If possible go for some paid trading course and you will dramatically change in your trading career. Don’t think you are ready to make a profit unless you successful demo trade for at least three months.