Is Swing Trading Profitable ?

Before you embark into Swing and Day Trading, you must find whether this business is profitable.

We take you through great insights on how to ensure that your Swing Trading business is Profitable.

Swing Trading Profitable: What Is It ?

Before we get into the meat of the discussion, let’s first define what is Swing Trading.

A Swing Trade is a short term trade with the goal to hold the position for no more than a few days.

In case you might be wondering, Swing Trading is totally legal.

If I were to joke that I am a Day Trader by Day and a Swing Trader by Night, do not take it that I partake in some immoral activity.

For instance, you can buy/sell a position and determine that you will close it for profit within a week.

Notice that the initial position can be a Sell as well as a Buy !

You need to get this concept right away so as not to be limited in what you can do in the market.

Now, depending on how that position evolves between the time of your entry and your intended close date, you can end up holding the position for just a few hours or even minutes.

In this case, you would have turned your Swing trade into a Day trade.

For simplicity, we will use the Day and Swing Trading concepts interchangeably so as not to complicate matters.

Many may wonder If Swing Trading is more Profitable Than Day Trading ?

At this stage, We shall reserve that topic for a later time.

Next, let’s enumerate the different securities you can DAY or Swing trade with.

  • Currencies
  • Forex
  • Equity Stocks
  • Stock Options is what this discussion is primarily about.

We prefer Swing trading Options to other securities because the initial required capital is very small.

This enables beginner investors to get into the game with low cost to entry.

Later on, it will be possible to scale up the amount of risk once your account has grown.

Is Your Swing Trading Profitable: How To Get There ?

If you are serious about Trading, you must acquire good habits just like you would do at any other job/career.

One such habit is to carry a Trading Journal.

What is a Trading Journal ?

Some traders use a Notebook Journal where they record their trades each and every day.

The content should be a reason for entering the trade, the Target Price for closing the trade, the Stop Loss price for exiting the trade and the outcome in terms of profit or loss.

When it comes to Trading profits and losses, I like to record mine in percentages(%).

I usually tolerate up to 30-40% loss in my Options positions before I consider the trade unsuccessful.

Now, I must warn ALL beginners traders that they Must Abide by whatever Rule they have in a place for losses.

It is easier said that done.

In the heat of the battle, your emotions may take over or you may be inclined to not listen to the market.

Do not do so and rather develop a good habit of honoring your stop loss in trading stocks or Options.

One Trading cardinal Sin to avoid by all means is to add more contracts to a losing position.

The so-called averaging down method IS NOT the way you will make your Day or Swing Trading Profitable.

Nowadays, a great deal of traders may elect to do record keeping digitally.

You can use a simple Excel spreadsheet.

I then to do both manual writing and the tracking with Excel.

Excel document recording Swing Trading Profits daily for each strategy

The digital recording gives me the ability to quickly generate reports and track efficiency of specific strategies.

As shown in the above image, I can filter per Setup to study my tendencies as well as the effectiveness of each setup.

Track Your Trading System To Measure Is Profitability

All Businesses have segments or divisions and when they report quarterly Earnings, they disclose the performance of each.

Your Swing Trading business has to be the same way.

You may start with one strategy (segment) but you are bound to develop many over time.

Therefore, it is important to know how each one is affecting your overall result.

In Options trading, the two basic strategies are Put options and Call Options.

Are you more biased towards Calls ? This is the case for the majority of beginners.

How do I know ?

Firstly, because I did that myself.

I also talk to many new traders who are more attracted to the Calls. It must be a psychological thing to see an asset trending up.

Finally, I can gauge by the popularity of the videos I share on YouTube Channel of the trades I used in my tutorials.

Videos on calls are 3-4 times more popular than videos on Puts.

May I bring to your attention that more money is actually made on the Puts.

When To Take Profit on a Swing Trade

There are several ways to take profit on a winning Option position.

My favorite one is what I called scaled profit.

I like to acquire at least 3 contracts when entering a position.

Here is why.

Let’s assume each contract cost is $1. So the Total cost for three is $300.

A contract in US Options is based on 100 shares of the underlying stock so the actual amount to purchase one contract in our example is 100 times $1.

When the position start moving in my favor and reaches 100% profit for instance, meaning each contract is worth $200 of actual money, I will sell 2 contracts and leave one.

This ensures that this trading will be a winning trade no matter what happens with the last contract.

I use 100% as a round target profit percentage.

But the reality is that once the position reaches 67% gains (your trading platform has an indicator for this and you can automate a closing at this target profit), selling 2/3 of the position ensure that the position will not be a losing one.

By using this scaled profit taking, you can relax and let the market drive up the last runner.

Here is a short video depicting this technique in an example of Profitable Swing Trade on MCD stock.

How To Manage Trading Account Loss

If you trade for a while, you will encounter a trading slump at some point.

The best advice in handling this difficult phase is to take a break and regroup.

However, our mind does not lead us to this approach.

Typically, traders will tend to take more risk in hope to quickly erase the losses which leads to further losses.

Apart from taking a break, you can also reduce your risk on each trade.

By this I mean if you used to trade 10 contracts for instance, reduce that to 3 contracts.

This is where Patience will play an even bigger role.

The market ALWAYS reward patient traders. Those who are disciplined to wait for their setups to materialize.

Trust me, they ALWAYS do.

The question is would you be ready psychologically and with enough Powder (Buying Power) in your account to benefit from it ?

I can recall the number of days this year alone (we are only early March) where sitting out the first four hours observing the market moves provided great opportunities later in those days.

Let me leave you with a Fisherman Analogy.

Great fishermen can spend hours waiting for their baits to come alive.

The river where the fish is like the market we trade in.

We as traders must have the Discipline and Patience of Great fishermen for it is a good path to building a profitable Swing trading business.

Our Approach To Ensuring Trading Profit

One proven consistent Strategy that we can recommend is to track the Smart Money.

These are big pocket institutions that consistently move the markets.

By Following them, you will be confident that you are on the right side for your trades.

This should be your default strategy at any time.

Here is a Full Description on How to go about using this System to guarantee that your Swing Trading is Profitable.

You can start with very small amount of money and scale it up later.

One of the Subscribers on our YouTube Channel started about a month ago.

He may have benefited from beginner’s luck after reading an article on one of our trade on Amazon.

He made thousands of dollars overnight but a week ago, he left me a message requesting videos on specific technical strategies.

By the way, he traded calls exclusively for two weeks.

I introduced him to Puts Options after that and I am glad he reported making more thousands dollars this past week when the markets sold off.

If he did it, So Can You.


We shared some key insights on how to ensure that your Swing trading is Profitable.

If you would like to learn about other concepts to help your trading account navigate the markets, click here.

To Take a Look at our videos Tutorials where we apply the very guidelines we share on this Blog, please visit our YouTube Channel.

Suggested Resources

#1 : The #1 Trading Tool You Don’t Want To Miss In 2020
#2: Check Out Our Subscription Trade Alerts
#3: What You Need To Get Your Options Trading Career Started

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