Safe Swing Trading Strategy: It’s the key to getting profitable trading results… without risking your capital. And coming up with a safe swing trading strategy for your stock picks is actually easier than you think. In fact…
I’ve even written a free mini-ebook about a strategy for safely swing trading stocks! You can download it free below this blog post, or on the right-hand-side of this page. Cool, right?
So why am I so focused on a strategy for safely swing trading stocks? Well, that’s easy. The swing trading approach to stock trading is one of the best. And if you can swing trade safely, you don’t need to worry about watching your stocks all day (which is a big concern for most part time investors who have full time jobs… probably like you). So…
In this short blog post, I’ll show you my approach to safely swing trading stocks, as well as a couple of other easy risk management tools you can use to help you develop your own strategy for safely swing trading the stock ideas in your portfolio.
Safe Swing Trading Strategy – The Basics:
There are a few things that are fundamental to any good trading strategy, and a safe swing trading strategy is no exception. The most basic thing you need to come up with is an “edge.” If you don’t have some kind of “edge” that guides your trading decision making, you don’t stand a chance. To get started, you can see an example of my approach to swing trading stocks.
Coming up with your own “edge” will take time and practice. If you aren’t an experienced swing trader yet you’re going need to do some experimentation. There’s no way around it. So I recommend using a stock market simulation and then developing a simple trading plan once you’re seeing some positive results. After all, the safest swing trading strategy is one you build without risking any of your hard-earned money. That’s why these online simulators are so great for testing out new stock trading ideas.
Now there’s just one more thing you should know.
When you’re coming up with your stock market edge, and when you’re practicing implementing your trading system, you’re going to want to try and focus on a stock trading strategy that jives with your personality. You don’t want to copy what someone else is doing if it’s not going to be congruent with how you approach stock trading, (not to mention life in general). That makes sense, right? After all… you’re trading to be rich… not to be a slave to someone else’s ideas.
Once you have an idea of your swing trading strategy, there are a few ways you can use technical and fundamental analysis to reduce your risk and improve your safety. So check this out…
Technical Safety: The Safest Way to Swing Trade Stocks
Technical analysis is a very common component of safe strategies for swing trading stocks. By looking at prior support and resistance levels, you can use technical analysis to identify appropriate stop losses. So what’s the safest place to put stop losses for swing trades?
I usually like to put my stop losses a few percentage points below the most obvious support levels. That way you can still hold your position if the stock retraces to support. But if your swing trade starts to crash you will be stopped out before any major damage.
When you set a stop loss 7-8% below your swing trade entry (and 1-3% below recent support levels) then you are guaranteed to have a pretty safe swing trading strategy. As long as you are disciplined about keeping your positions small and honouring your stop losses you will never lose all of your money on a single trade. Got it?
Of course the more you learn about technical stock charts the safer you’ll be in your technical swing trading strategy. But there’s one more important approach to a safe swing trading strategy for stocks that you should know about…
Fundamental Margin of Safety: The Intelligent Strategy for Swing Trading Stocks Safely
Ensuring the stocks you’re swing trading have a fundamental margin of safety is the best way to stay out of trouble. And for me, this fundamental approach to safe swing trading underpins how my stock idea selection strategy. You see…
When you focus on value investing you are generally a little safer off. If you’re chasing penny stock scams or following the momentum trend, you might cross the line from intelligent investing to speculating. But when you focus on valuing the business and maintaing a margin of safety then you don’t need to worry as much about your stock price moving against you. That’s because value investing requires you to find stocks that are supported by assets and are inherently safer before you ever think about the technical price action. Make sense?
So, now that you’ve reviewed some of the different fundamental and technical tools you can use to come up with a safe swing trading strategy you should be feeling a bit better.
But If Not: I encourage you to download my free mini-ebook on how to come up with a safe swing trading strategy. Just fill out the form below this blog post to get in-depth access to my safe swing trading strategy. Why not check it out?