Simple Trading Success Trading That Brings You Success
If you want to be a swing trader, get ready to do some work because many want to profit from swing trading but very few make it. Sadly, every year most walk away from the idea a lot wiser and a lot poorer. But things could be much better if you have right tools right from the outset.
I’ve listed some of the most common questions asked by novice traders. I hope my answers will shorten and smoothen your learning curve and bring you to be a profitable trader as soon as possible. Profiting from swing trading is very much all about acquiring the knowledge and testing.
1. What percentage of capital do you advise to risk on a single swing trade? 1-2% or is 5% say too aggressive?
Swing trading is as much an art as it is a science. If you are an experienced trader using a percentage of your capital is a good management and capital allocation technique. But if you are a novice trader this is not the best way to manage your risk. Each trade has its own maximum loss which is independent of your account size. Newbie traders typically take positions that are too large for their risk tolerance and knowledge level. In fact, their account performance worsens when they take on too large positions because a) they get too emotional and exit winning trades too early and b) they hold losing positions too long as they panic due to the large potential loss
2. Are account growth numbers of 5 or 10% a month realistic?
These are not realistic (and hardly achievable) for novice traders. Newbies should focus on the dynamics that generate the money rather than the dollar returns. Trying to make money whilst learning about swing trading creates all sorts of performance anxiety issues. Learn how to swing trade, and the money will follow.
3. I want to be a full time trader and I’ve been told it’s feasible to make $1,000 a week for every $10,000 in the account. Is this true?
This is not just an unrealistic assumption, but also a dangerous one. You can certainly make $1,000 on a $10,000 account in one week but at that risk levels you will be washed out by the market very quickly due to unexpected losses.
Novice traders should start to trade with small positions until they can build a successful track record. Remember, at the beginning it’s about learning the profit-making process rather than making money per se.
