If you want to be successful as a swing trader, you have to know the fundamentals of this type of trading. It falls back into the most important part of securities trading: knowing the market trends and following them on a daily basis. It is impossible to become successful as a swing trader, or even a fundamental trader – unless you stay informed. Unlike real estate investments that are less volatile the majority of the time, securities trading can change dramatically from the time the stock exchange opens at 9:00 a.m. until the time it closes at 3:00 p.m. In fact, stock that was at the top in the morning can plunge to less than you paid for it by the afternoon, and likewise, it can be high when the market closes, and be down substantially by the time it reopens. If you stay on top of the trends and know what is happening, you can make the right moves in order to avoid taking a loss in the event of a market crash.
Following these trends on a regular basis is not a guarantee that you will not take a loss because if the market crashes, that is out of your control. However, if you follow it on a regular basis, there is a better chance that you will know in enough time to trade stock before it plunges, thus taking the burden of the loss off yourself. Nothing in the securities market is a guarantee, but for the swing trader, knowing when to trade the stock is a key issue. Unlike the fundamental trader who will not hold stock more than one day, the swing trader waits for the economic conditions to affect the price of the stock, which is several days after the event. Is this a good idea? That depends since sometimes an event can cause an immediate plunge in the price of the stock, and thus the fundamental trader is in a better position financially than the swing trader is.
Though following the trends and acting accordingly may not always prevent a decrease in profit when trading stock, it is the best instrument that you have at your disposal. The market is consistently volatile, so you can’t prevent taking a loss at some point; all you can do is remain educated and informed in order to reduce the potential for loss.