Swing Trading in Stocks, How to Overcome The Risks

Have you ever heard the term swing trading ? For some people who already play stocks actively. They certainly understand this term very well, but not for those who are laymen. Trading is a short-term buying and selling activity. There are several types of trading strategies classified by time frame.

As super trading for the medium term 6-12 months taking advantage of the rising price trend. Swing trading is for a short period of time less than a month, and scalping for a very short period can be as little as a few minutes. The choice of strategy depends on each trader's risk profile and goals.

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If you are patient to hold in the medium term then you can use the super trader strategy. When you are ready to risk high volatility, you can use a scalding strategy that must be monitored at all times. However, there are tips you can do to reduce the risk of this trading activity.

What is Swing Trading

Stock Swing Trade is a method suitable for investors who do not want to worry about seeing stock prices every minute. And want a steady profit on a weekly basis, and don't know where to buy and sell stocks. What exactly is swing trading ?

This is a form of trading that uses the basic concept of “buy on swing low, sell on swing high”. Swing theory sounds easy, but in practice it is not as easy as imagined. You will be forced to fantasize about whether the stock is really bottom.

Don't let your imagination go astray and think that the stock price is already at the bottom. Then you buy a lot of stock, but the price goes down even more. Swing trading application is even the most difficult type of trading, because.

There are no concrete indicators when a stock price is at the bottom and at the top, these two conditions are actually still in the imagination of the trader. Based on the time frame, stock swing trading is an activity of buying and selling shares in a period of less than a month.

Minimize Risk of Swing Trading

There are two ways to buy shares in the Stock Swing Trading Method, namely, Buy on Weakness which is a buying strategy when the stock price bounces from the support area.

And Buy on Breakout which is a buying strategy when the price is confirmed stock i has broken out of the resistance area. It is not impossible to reduce the risk of swing trading. How to reduce the bad effect, as follows:

1. Average Down

The process of injecting fresh money to open long positions after the purchase price has fallen from its initial price is called Averaging Down, you should avoid this because Averaging Down will make you lose when the price continues to fall.

2. Stop Loss

Sometimes the trading positions we predict do not match reality, events like this will definitely have an impact on the losses you will face because you cannot avoid this situation at all. For that, you can apply a Stop Loss which will at least help you reduce the losses that occur.

In other words, when you buy a stock, it will hold for a maximum of 1 month, even if it has touched the resistance area in the first week, the trader can take profit. Average profit percentage is 10%, stop loss is 5%.

The assets allocated in this strategy are 5-10 shares with a maximum share for 1 share of 10% of the total capital. Basically, the swing trading strategy uses technical analysis that every trader must understand.

Starting from cycles, trends, to support and resistance. After knowing the support and resistance, the trader can make a trading plan, when to buy and when to sell.

Swing traders use more technical analysis when deciding whether to buy or sell stocks. But don't neglect fundamental analysis, trends and price patterns.

Stock Trader Swing Strategy

After successfully buying, the trader needs to know how to sell. There are two ways to sell shares in a swing trading strategy, Selling on Strength, which is selling shares when they are in a resistance area, and waiting for a Candlestick Reversal as a confirmation that the price strengthening is complete.

So it has the potential to go to down. For example in BBCA stock, selling can be done by Selling on Strength when the price touches the 7750 resistance area. Although it still forms a doji candle that shows signs of uncertainty, this area is a resistance area which tends to take profit.

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Therefore traders can consider taking profit by Selling on Strength. Meanwhile, selling stocks by waiting for a reversal candle is exemplified in MAPI stocks, namely when the price touches the 790 resistance area obtained from the daily MA100.

The price is stuck in the resistance area and moves down and then forms a downward reversal candle with a red body candle. So with the reversal candle, traders need to take profit to secure a profit because the price has the potential to continue falling.

There are at least two swing trading strategies, as follows :

1. Entry Technique

This entry technique is a stock investment strategy where you enter the market and buy stocks following the trend. A trend is the direction of the trend of stock price movements in a given period of time.

Divided into an upward trend (uptrend), a decrease (downtrend), and horizontally (to the side). By reading the trend as best you can, you can determine when the most appropriate entry is that can provide better risk/reward potential.

Including exit placement or loss prevention. A scalable and efficient entry method will determine swing trading success in the long run. One of the things you can do to improve your entry technique to make it more precise is to create an entry checklist.

Criteria such as important support or resistance levels, high probability trading signals, estimated entry levels, risk/reward ratios and others.

2. Exit Technique

The exit technique is a strategy to exit the market at the right time. This exit technique is important to help you get the benefit of the stock in the best position.

This exit technique is used when you have reached the value you want or when the value of the stock has touched the lower limit value you have set.

The exit technique helps traders not to be seduced by the tremendous but very dangerous increase in stock prices, and also not to suffer too big a loss when experiencing a significant drop in stock prices.

That is why determining the exit point is very important for swing traders to understand. Don't forget to use the Trailing Stop facility to maximize profits.

Therefore, when you have entered the stock market and made a purchase transaction, do not forget to determine the exit point as well. By specifying the exact time of entry and exit.


The way to overcome the swing trading risk is to ensure that the asset or security in question is liquid. In addition, swing traders can also diversify by spreading money across various assets with different market capitalizations, different sectors or different asset classes.

To prevent losses that could threaten financial conditions, traders can set a maximum loss value. For example, a trader only wants to lose a maximum of 2% of the total asset. Therefore, if the total loss has exceeded this limit, the trader can immediately sell the asset and look for another better asset to buy.

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