Nearly everyone who is starting their swing trading career, do so working full time. They need to provide for themselves in the meantime they’re learning swing trading, which is why choosing a trading form that’s not too time-consuming is paramount.

You can definitely swing trade with a full-time job. Swing trading is a trading form that requires very little effort by the trader compared to other forms of trading. Once you have your trading strategy, you basically only have to sit by the computer some 10-15 minutes a day!

However, it will take some time for you to come to this stage, and it will require some effort. There are many things that you need to learn and practice to fully grasp swing trading.

What Do I Need to learn to Swing trade Part Time?

As there are many things to learn, it would be almost impossible to cover it all in one article. However, we will provide the most important aspects below:

  1. The trading strategy
  2. Psychology
  3. Position sizing 

 

  1. The trading strategy is the tool that you use to profit in the markets. Without it, you’re doomed to trade. It simply is a collection of rules, that have predictive powers in the market. A trading strategy could be to buy once the market has made two lower closes, and sell once it’s made two higher closes. It could basically be any rule, as long as it has an edge, meaning that it has predictive potential!
  2. Trading psychology is also important. This is because you are the one who is going to perform the trades. A trader who cannot control his own emotions is a trader doomed to fail. Most traders use to dismiss trading psychology as something that’s not applicable to them. Nearly every one of them changes their minds after they’ve started trading. Anticipating the emotional stress that comes with trading simply cannot be made without having traded yourself!
  3.  Position sizing is the concept of managing your trade size to reduce risk. This is paramount, especially if you start with little capital. If you use too much leverage or take too large positions, you run the risk of wiping out your account. To avoid this, you need to learn methods to estimate risk and calculate the appropriate number of shares or contracts to trade each time.

Of all these, we at The Robust Trader would say that the strategy is the most important of them all. In fact, without it, you have nothing. You may be great at controlling your emotions and taking the right amount of risk, but without the trading strategy, you will NEVER become profitable.

That is not to say that the other ones are unimportant. They’re very important! It’s just that some traders tend to forget about the trading strategy, and get lost in trading psychology!

How Do I find a Trading Strategy?

So, now you probably wonder how you find a trading strategy. There are some different methods you could choose from.

The first one is to watch the market. You may try to notice how the market behaves, where it uses to turn around, and what indicators that work the best. There certainly are great traders that have managed to understand the market to such an extent that they’ve succeeded in formulating a trading strategy. Sometimes, they might not even know how it works, since they’ve managed to sense certain market behavior that’s undefinable.

These types of traders are not many. They used to be a lot more of them some decades ago. The reason for their decline is that markets have gotten harder. More and more traders are starting trading, and basically “erase” market tendencies that could have become a nice trading strategy.

The second way, which we prefer, is to backtest your idea. Backtesting means that you code your idea and test it on historical data. Doing so, you will quickly get to know if your idea works or not. There are many good and easy coding languages, such as easy language, that provide traders with powerful code, with nearly no programmings skills needed!

However, when backtesting strategies, you should be aware of curve fitting. Many traders fall into the pitfall of curve fitting!

Going long or short?

Going long means that you buy the share in the hope of it going up. Going short means that you sell short the share in hope of it going down.

In general, it’s much easier to find a strategy in equities if you look for long-only strategies.  That’s because of the long term bullish trend of the equity markets, which support price from below, and creates a nearly constant upwards pressure.

IN other markets, it might be easier to find strategies that go short. The wheat market is an example of a market that has been in a long term bearish state, where going short is the easiest option.

The Most Common Swing Trading Strategy Types

You could say there exist two types of trading strategies

  1. Mean reverting strategies
  2. Momentum strategies.

Mean reversion is when the price has moved too much in one direction and reverts to its mean. Traders use to name the excessive price movements as oversold and overbought levels. Mean reversion works really well in the equities market, especially for the long side. In stocks, finding a mean reversion strategy is easier than momentum strategies.

Momentum strategies are strategies that use the strength of the price movement to find the entry direction. So, if the market is trending upwards, that is that it’s caught momentum, we might go long with the general market direction.

A breakout strategy is a strategy that acts on price breaking through barriers in price. Depending on how you see things, breakouts could be part of momentum strategies. Those barriers could be, for example, the high or low of yesterday, or an indicator value. A breakout above the breakout level is typically long signal, and vice versa.

A Way Of Dealing With Psychology In Trading

When dealing with trading psychology, it comes down to dealing with your emotions. One of the best ways to do this is to keep a trading journal.

In your trading journal, you keep track of a number of things. It could be how you feel that particular day, how your trades went, or other things.

The power of keeping a trading journal lies in that it helps you to discover what you need to improve. Traders face challenges every day, but most of them are of the same type that just repeats themselves. When facing these challenges, traders also tend to make the same mistakes, over and over again. By keeping a trading journal, you can start to recognize these mistakes, and find ways of avoiding them.

Trading journals might not seem alluring at first, but traders who’ve tested them know that they work!

Conclusion

Swing trading is one of the best trading forms for traders that want to keep their day job and still trade. Once you have your strategy ready, it takes very little time, and still allows for some great profits!