Swing Trading – Part 1 – What Is Swing Trading

– [Narrator] Hi guys. So this is gonna be a video
series on swing trading. So, I have divided the
swing trading topic into five sub parts. In the first part,
this is this one, I’ll be explaining
what is swing trading. We’ll be covering up some
basics of swing trading as well. In the second part I’ll
be taking up support and resistance with
respect to swing trading. In third part we’ll be covering
up instrument selection, that is, which is the
best instrument to trade when you are practicing this
swing trading techniques. Part four will be about
a top down approach. This is something
I’ll be covering up in great detail ahead. And part five will be about
swing trading strategies. Now this part five will
be sub divided into a few parts because
all strategies cannot be covered in one part, right? So this series is
focused on what to trade, when to trade, and
how to trade it. So let’s get started. – [Narrator] In this
channel we talk about trading, investing,
and market analysis to help you become a
better investor and trader. So if you are new here,
consider subscribing. – [Instructor] So
learning objectives of this first part
are as follows. So I’ll be taking you through
some basic stuff for swing trading, then I’ll be doing
a comparison between swing trading, positional trading,
and the buy and hold approach, and then I’ll be moving
on to trading instruments that are available when we
are trying to swing trade. The next point that I’ll be
covering is how swing trading fits in overall market
strategy of a full time trader, then I’ll be taking up whether
you should adopt a system based swing trading as a
technique or you should go in for a discretionary
trading approach. Then there are two distinctive
swing trading approach that a trader can take. One is the top down approach
and the bottom up approach. I’ll be telling you why
the top down approach is the more preferred
method to swing trade. And in the end I’ll
be talking about trading platform tools
and your broker selection. So this part is focused on the
very basics of swing trading. I do understand that not
everybody is proficient with trading and
investing as a topic. So, which is why I am
deliberately making an attempt to start with the very basics and then build onto
advanced concepts. So I’ll just answer
this basic question, what is swing trading? So, swing trading is basically
a short term trading method that you can apply to
stock futures and options. In swing trading what you
do is you take on positions and you kind of keep it for
about two days to a few weeks. This also depends on
preference of a trader. Most of the traders
actually trade for a period of two days to 20 days or 10
days, and that again depends on your psychological
makeup as a trader. So most of the times the
trades taken in swing trade are based on technical
analysis concepts. But again, this is not limited
to technical analysis only. In case you are following
fundamental analysis very closely, so some
of the concepts like earning projections
or earnings estimate, these kind of
triggers can be used for trade entries as well. But this would be more
specific around earning seasons or major stock events. So, I’ll just cover
up a basic difference of what is swing trading,
positional trading, and buy and hold approach. Now, buy and hold is more
applicable to investments, but I have seen in markets
that there are traders out there who like to buy
stocks and kind of hold them from a trading perspective also. So, which is why I have kept
this buy and hold approach in sort of a trading
topic as well. So, in swing trading as I’ve
said it’s a short term method and the positional
holding period ranges from two days to
about a few weeks. Positional trading, again, it’s sort of a
medium term method. It’s not a short term
method, and the time duration for a trade typically
ranges between a few weeks to a few months. And buy and hold approach,
obviously I told you, it’s like a trader is
taking up a position and keeping that
position for a period of one year or a few years. Now, this happens
as well because now mostly if you buy a
stock for one year or more that itself categorizes
as an investment, but there are some traders
out there in the market who like to keep their
investment portfolio separate and like to keep their
trading portfolio separate, and in that trading
portfolio they kind of want to hold positions for
one or two years as well. So on this chart I’ll just
show you what is swing trading. So this is about
swing trading, right? So these swings that you’re
seeing this on the way up, this on the way down, again
this is on the way down. This one is again
on the way down. So these swings that you’re
seeing these are actually categorized as swing trading
because you are trying to capture this swing
or this one, right? Now, if you see this
particular movement, this cannot be
categorized as a swing because there are some
sort of retracements happening on the up side
and the down side, right? So basically a swing is
where you can clearly mark out a pivot
and price either falls or rises from there. So that is the job
of a swing trader. His aim is to capture
the most relevant swing that is likely
to happen, right? So positional trading
is sort of different because a trader is
more bothered about the larger price movement here. So, in this particular
case that price movement would be from July
to October 2015 and in this case it
would be from April 2016 to about April 2017, and in
this particular case it would about April 27 to January 2018. So these are the
kind of moves that a positional trader
prefers because he likes to get into positions
and he kind of holds on to that positions for
a period of let’s say a few months, right? So the buy and hold technique is hypothetically if you’re
holding a position here, even if the price
falls about 50% you still kind of
hold that position and you don’t kind of exit
on every down turn as such, and you keep on
holding that position ’til the relevant
conditions prevail. So, this sort of technique
actually requires a lot of patience and it’s a
completely different topic, which is why I won’t go there. But swing trading and
positional trading concepts are more
or less the same, except for the fact
that time duration of trade is much shorter
in swing trading, whereas in positional
trading it is much longer. So, we’ll just come to the
trading instruments aspect, which trading instruments are
available for swing trading. Before heading forward I
would just tell you that this part is a sort
of theoretical part because this will actually
form the building blocks for part two, three,
four, and five. I don’t think I would
end at part five because this is a
extremely vast subject, and I think as of now
I have just planned for five parts, but I
think it would easily extend up to 10 parts. So, which is why this part
one is extremely crucial, because you need to
get your basics right in order to understand what
is going to be taught in part two, three, four, five,
and so on and so forth. So the trading instruments
that are available for swing trading, they kind
of depend on market conditions and the trend direction and
the volatility conditions. Now, these three
specific aspects I’ll be taking up in
detail in remaining parts, that is, part two,
three, four, five. But you have to remember
that swing trading is sort of a short
term trading method. So, which is why
instrument selection is absolutely crucial here. The three most popular
instruments that we have available are
stocks, futures, and options. Now, in case you’re a
beginner, or you are trying to learn how to
trade, I will tell you that you should stick to stocks when it comes to swing trading, because the risk management
and position sizing is much easier in stocks,
and this should be your most preferred instrument. In fact, my personal
preference is always to stick with stocks as far
as swing trading is concerned. Futures is the most
popular instrument because at a very small margin you can actually build up
pretty large positions. But it is actually also
one of the instruments that leads to huge
capital destruction. So, which is why I categorize
this instrument as risk to reward is not that great
in this futures instrument especially for beginners,
because it’s kind of difficult to manage risk in futures. Options is actually the
most rewarding instrument, but the experience
level required to manage a trade in options
is quite high. It is more rewarding in
terms of risk to reward, and there is a limited
capital that you can lose especially if you’re
buying options. But again, I would
still say that in case you are starting out or even
you’re two, three years, sort of you have
experience in the market, still try and stick
to stocks before you graduate to the next level. So in terms of moving
up to the next level I would say that first
start with stocks, then move to futures,
and then finally try your hand on options, right? Because in my opinion
options are one of the most trickiest instrument to trade, whether from
positional perspective or swing trading perspective. I’m an options trader as well. So I trade these instruments
quite frequently, which is why out of
experience I’m telling you that trading options is
actually pretty difficult. It’s actually more lucrative
because most of the brokers and advisors, if I
may use the word, they kind of push retail
traders to pick up positions in options,
but I think you should be away from this
instrument for a long time until you master
how to trade stocks. Then you need to master
how to trade futures and then you should
move on to options. So that is how I prefer
for a trader to graduate from one instrument to other. So I’ll just come to this
aspect which is swing trading as an overall market strategy. Now, why this is important
is because I often see that traders commit a lot
of money in swing trading and they’re also not
clear about what type of market strategy
they should adopt. So, swing trading in my
opinion should not form 100% of your market strategy,
because in market strategy, I’ll just show you
this chart first. Yeah, so this is the
sort of market strategy I follow in trading. So my market strategy
comprises of three independent strategies, which is
one is swing trading, the second is
positional trading, and third is investments, right? So these three sort
of investment and
trading techniques actually form my
complete market strategy. So this, I would say that
this depends on trader, because there will be
occasions where a trader would feel that he’s
just a swing trader. He does not want to
invest or he does not want to trade positionally. That is fine. But in general, if
you’re starting out try to classify
your market strategy into three sub topics,
which is positional trading, swing trading, and
long term investment. Now, in positional
trading you should stick to stocks and futures. In swing trading you should, you can experiment with
stocks, futures, and options, and for long term investments
there are a lot of options available, that is, stocks,
bonds, deposits, gold, silver. The list is endless. So, if you’re starting
out I would say that for positional trading,
which is a completely separate topic and
I will cover it up once I’ve finished
with swing trading and options trading topic,
for positional trading and swing trading start
with stocks first. Don’t move to
futures and options until and unless you sort of
master how to trade stocks. And long term investments,
again, I have covered some bit of this
topic in detail. So you can check out the
channel for how to select stocks to invest in the stock market. So I’ll just come
to asset allocation when it comes to
market strategy. Now this is the sort of asset
allocation that I follow. So I had shown in this
previous slide that my market strategy
comprises of swing trading, positional trading,
and investment. Now the way I divide my
capital is that I allocate about 10% capital
to swing trading, then I allocate about 30%
capital to positional trading, and for long term investments I allocate 60% of
my money, all right? So, this is the sort of
income categories that I have classified based on my
psychological comfort level. So, for me, the positional
trading that I do is my active income because
I am a full time trader. The swing trading that I
do is my passive income. That is, my life does not
depend on this income. It mostly depends on
positional trading. And long term investments,
obviously you cannot categorize them as income
because they are the sort of long term returns that
you take out of the market. So the modified chart
that I showed you, this is the initial chart. So, based on capital
allocation this would be my market strategy. That 10% of my money
goes into swing trading. About 30% goes into
positional trading, and 60% of my money goes
into investments, right? So, this is how I sort
of divide my money when it comes to my
overall market strategy. Now, understanding this, especially if you’re a
beginner, is important. Get into the habit of
dividing your money into three or four segments
which you prefer. You can also add one that’s
a fixed deposit segment or IPO segment, whatever
segment you want to add based again on
your comfort level. But get into the habit
of allocating your money in terms of the various
strategies you are going to apply in market,
because not all years will pass by where all
these three strategies would make you money. It would be that those
years are extremely rare when you will make money
in positional trading, swing trading, and long term
investment at the same time. So there are times when
investments won’t do well, only swing trading and
positional trading will do well, and then there will be
time only when investments will do well, and swing trading
and in positional trading you won’t make that much money. So, which is why it
is extremely important to allocate capital to different
sort of market strategies. So now I’ll come
to swing trading, when it comes to trading systems
or discretionary trading. Now, trading systems is
when you sort of take a set of rules and
you kind of put them into a computer program
and that program actually gives you
entry or exit signals. Now system trading is something, it’s a good thing,
especially in India. As of now, you’re
seeing a lot of brokers providing these back
end APIs through which you can sort of build
your own trading systems and do kind of automation
stuff, you know? You just buy and sell
based on whatever triggers are coming out of
your trading systems. Now, this is a good thing. But for a old school
trader like me I’ve always preferred
discretionary trading because this where
my own analysis or my own reading of
market comes into picture. Now, this ultimately depends
on from trader to trader whether he wants to make
a swing trading system or whether he wants to
practice swing trading based on sort of
discretionary approach where he’ll be
looking at charts, he’ll be looking
at other indicators and what the broader
market is doing, and then taking a
call whether he wants to trade in this environment
or wants to sit out, whereas a trading system
does not differentiate in any market condition,
unless and until you have some advanced
programming out there, which can see into
the insights of what is going on in the
overall market. I think a human mind is
only capable of doing that. I don’t think various
programs or softwares out there are capable enough of sort of replacing the
insight that a human mind can have with respect to trading and overall market conditions. So, in my opinion most
of the trading systems actually fail to capitalize
on the human element and that forms a
huge part of trading. In case you’ve been in the
market for one or two years you would know what
I’m talking about. A trader’s intuition,
a trader’s judgment, or his ability to foresee
what is going to happen, I don’t think there is
any trading system yet that can actually replace
these qualities of a trader. So, which is why I always prefer a discretionary trading approach where I want to rely on my
ability to read the market rather than a system’s ability
to exit or entry a trade. There’s one more point
I want to highlight and that is in
discretionary trading your trade management
is a lot better because you, at times
you look at the screen and you know that
in case you are long you know that a sudden
selling pressure comes into the market
you can immediately, based on your intuitive skills,
you can exit that trade. But that does not happen
in a trading system, which is why my personal bias is always towards
discretionary trading, but I leave it up to
you whether you want to follow this approach
or you want to prefer something like a
automated trading system. That is also fine,
because there are traders who get wonderful results
out of a trading system because they remove
their emotions out of their participation
in the market. So that also works. I’m not saying
that does not work. But I personally prefer to be
completely involved in trading and I believe that there
is no system out there that can actually
replace your ability to read the overall market. So now we come to
our trading approach. Now as we’ll be covering
up more & more parts in swing trading you would
see more of this in detail. So there are two sorts of
approach that you can follow. One is the top down approach and another one is the
bottom up approach. Now I have a completely
different part for the top down approach. In top down approach is
what happens is we start with the broader market index, then we move on to
sector, and then we kind of pick individual stocks. So this approach is a
more holistic approach. In my opinion, you get more
high probability trades when you sort of
follow this approach rather than bottom
up approach where you don’t look at the index,
you don’t look at sectors, you simply go to,
you simply follow a stock specific
approach and you pick up stocks for swing trading. Now, luckily I am doing
this swing trading series in the kind of
market environment which is not conducive
for long trades. There are many stocks
that are available for swing trading as of
now on the long side, but look what will happen. If you are doing the
bottom up approach you’ll be selecting
stocks for a long trade but the overall context
or the overall direction of the market at least
for the short term has been down and
volatile, and which is why I think you will
have more whipsaws if you sort of follow
bottom up approach, that is stock specific approach, in current market conditions. So I hope my point is clear, which is why if you start
with top down approach that is you take
the trend of index then you move to
trend of sectors and then you pick out
stocks from those sectors in the direction
of trend and I feel the probability of picking
out winning trades is more. So personally I practice
this top down approach and that is what I’ll be
showing you in subsequent parts. So before ending this
part I’ll just take up the subject of platform,
tools, and broker. Now again, I’ve taken
up this very basic topic because traders out there
are not familiar with basic concepts and these things also need to be
covered in depth. Now, by trading platform I mean
technical analysis softwares or a web based technical
chart platform. Now for swing trading I
think both of them can work. In case you have a technical
software, that’s great. You can actually
customize your indicators, have a pre screen ready. Every morning you can get up and directly pick out
trades from that software. A web based system, web based
technical chart platform does have some drawbacks,
but in case you don’t want to invest in
a stock software, then that’s completely fine. That does not matter. When it comes to tools
I would still maintain that a proper technical
analysis software has more tools and more
sort of ability for you to manage or read
your analysis well, just because of the
amount of, or the volume of tools that are
available on a proper technical analysis software. You can pick out any
software you want. I personally use Ninjatrader,
Amibroker, Market Delta. So it’s completely up to
you in case you want to. The most important topic that
I want to focus on is broker. Now quite often for swing
trading I think I will encourage you to go out and
pick out a discount broker that is a low cost
broker because margins as such are low when it comes
to swing trading profits. But do your research
properly while picking out a broker, especially
have a different account for positional trading
and investment, because have a full time
account or a full time service brokers are there. Keep your positional
trading and investment portfolio with them. As far as swing trading
portfolio is concerned you can maintain that
with a low cost broker. Try and research on the kind
of broker you’re choosing from because especially
on event heavy days you do tend to see that
these low cost brokers kind of, their system freezes. The orders don’t go through. So these are the sort of
things you need to consider before trying to short
list a low cost broker. So, do your research well. There are a lot of social
platforms available where you will come
to know whether on an event day that particular
broker his system froze or not. What about his customer service
when such things happen? You need to sort of take those
things into account as well. So, keep a sort of
prize on your account that you’re going to
hand over to your broker. Don’t think that you have
a small account today which is why you
need to compromise on
this broker aspect. Today you might be small
but tomorrow you may grow into a very big trader. So, which is why always, value yourself more, and ask questions to your
broker before trying to sign up. Have a demo of his
trading platform. See whether his systems
are capable enough to handle an event heavy day, and only then you will go
out and pick out a broker. So, I’ll just summarize
the key points here. So this part was
a very basic part that I wanted to do
for even beginners who don’t know much
about swing trading, and if you see in my
subsequent videos also, other parts that I’m doing,
whether it’s Bank Nifty series or Relative Strength
series, I am trying to focus on one thing, that is
to start with basics and then build on to
advanced concepts, and this is something I
will maintain throughout because I need everyone
on same playing field before I can start
discussing advanced topics. So in the next part
I’ll be covering up support and resistance
level, how to determine that in swing trading,
because in swing trading if you can determine support
and resistance level accurately or maybe in a range then
half of your job is done. So again, this is planned
for a five part series, but I will probably extend
to about 10 to 12 parts, because this is a vast topic, and once I reach this
strategies section I know for sure that
this would extend to about 10 to 12 parts easily. So, that’s all for today. In case you have any doubt
do leave a comment below, and I’ll get back to
you as soon as possible, and thanks a lot for
watching this video. – [Narrator] Click on
the subscribe button and bell icon to get
instantly notified when a new video is uploaded. Thank you for subscribing.

52 thoughts on “Swing Trading – Part 1 – What Is Swing Trading

  1. This is the first part of Swing Trading series.

    I covered the very basics of Swing Trading in this video.

    Also covered how Swing trading should fit within overall market strategy.

    Have also touched base on Capital allocation for Swing Trading, Software selection and Broker selection.

    Let me know if you have any doubts.

    Thanks for Watching.


  2. excelation vidyo and swing trading complete corse ka vodyo banayege aur uplode karog thanks for effort god bless you

  3. The most helpful series since Relative Strength. God bless bro. & thank you.
    I need ur little help. I am coding for gann square of 9 strategy, but unable to find its algorithm. If u know formula for it, pls care to share. Also I have created a screener based on live data (not google data which is 10-15 delayed), how can i share with u for inputs?

  4. Very good video on swing trading basics……eagerly expecting next videos…..Good and appreciable effort Bro.

  5. Thanks for the pain & efforts you have taken on this very important subject. Cannot wait for the rest of the parts.
    With all due respect, a suggestion- if you could make 60 minutes vids in which you can cover 3 to 4 parts, it would be very useful. This would facilitate food for brain for at least a week to study & practice the strategies explained.
    Would also recommend if you could hold live youtube sessions on week ends so as to clarify any doubts. Would very much appreciate.

  6. Thanks a lot for the in depth insight on types of trading and investment planning. Waiting for further videos 👍😊

  7. video given new views abt trading ..thanks a ton brother ..and would like know to still profile based trading method existing around Indian market?

  8. I liked your video a lot. I have watched many videos from hundreds of tutors/advisers. But I strongly feel you are a real professional and a seasoned trader. Appreciate the efforts you have imparted to prepare this video. BTW do you conduct any online trainings? I'll love to enroll.


  10. Great explanation Sir. Please advise a good technical software which has all the indicators you have explained in the playlist which is of decent cost

  11. सर प्रणाम आपने सिंग ट्रेडिंग के बारे में वीडियो बनाने का निश्चय किया है और ट्रेडर को किस तरह शिक्षीत करने का निर्णय किया है उसके लिऐ धन्यवाद
    परन्तु हमारा ऐक सुझाव है कि ये सब सिरीज़ आप हिंदी में भी विडियो बनाये ताकि आप की जो मंशा है वो जन जन जक पहुंच और आप के चैनल से जुड़े
    इससे आप की प्रंशिदी भी होगी और धंन लाभ भी होगा

  12. Excellent video, I really wish to meet you one day and thank you for everything. One day I will fulfill my dreams and I will meet you in person

  13. Ur a gifted person wid an ability to teach others so beautifully..i watch ur videos religiously n wil carry on..m about to begin ma journey in stock market as a beginner n anticipate much frm u..god bless..tk care

  14. Wow.. Best trading channel in India for me personally.
    I am from North East India and have trouble understanding Hindi so I hope and pray that you continue to make videos in English. That will be beneficial even for the Southern people. God bless you abundantly for bringing out these contents all for free.
    You are a true Nation Builder, empowering people with knowledge free of cost.

  15. भाई हमे इंग्लिश थोड़ी कम आती है क्या आप हमारे लिए इसका हिंदी संस्करण ला सकते है । समझने में और ज्यादा आसानी होगी । धन्यवाद

  16. Sir, I have a query regarding the trading journal.

    I record my trades regularly, however, I feel they are not in a proper manner.
    I include entry-exit, stop date, time, qty, % gain or loss.
    What else should be recorded?

    And also where should I record all other observations in a systematic manner.

    Your advice would surely help.
    Thanks for your help.

  17. Swing Trading All Parts https://www.youtube.com/playlist?list=PL9myHLrE5hrPQI6ljQCNZ0KQsnvTsgENG

    Subscribe To Our Channel https://www.youtube.com/c/TradeWithTrend?sub_confirmation=1

    Telegram Broadcast Group https://t.me/TradingWithTrend

    Check Out all other videos at https://youtube.com/tradewithtrend/videos

    Kindly hit the Subscribe Button & Bell Notification Icon.

    Thanks For Watching Guys. Tc & Be Safe.

  18. i've started watching your videos and i'd like to thank alot for providing such amazing content
    btw can you provide PPT or Word or PDF of these videos ? it'll be really helpful. thanks again

  19. let this swing trading playlist extend upto 10 parts or more . we all prefer deep knowledge on a topic .

  20. sir one personal question.. how much u earn through trading.. per day. dont tell the exact amount just give the estimate….

  21. This is a very well thought out and very well presented educational system. Thank you very much for the time that you spent doing this. It is wonderful to see someone try so hard to help others. Once again, thank you!

  22. Hi ST..Some off topic questions ..
    1. Do you believe that strategies stop working after some time and we need to keep tweaking them as time passes.
    2. Do you believe that one should have an "EDGE" in trading/strategy

  23. good information. Can you make a video on, how to calculate target, for e.g. cmp and how do i set my target??

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