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Is Swing Trading Better than Investing?
Swing Trading is Better than Investing If you are looking for high returns, then swing trading is definitely a better choice than investing but at the cost of a risk in comparison to investing. You must understand the basic operating features of saving, investing and trading before you consider swinRead more
Swing Trading is Better than Investing
If you are looking for high returns, then swing trading is definitely a better choice than investing but at the cost of a risk in comparison to investing.
You must understand the basic operating features of saving, investing and trading before you consider swing trading better than investing.
Saving, investing, and trading in the financial sector have a specific discrimination and are applicable in different instances.
For instance you need to save your earned income, if you are supposed to use it for immediate needs such as daily amenities.
While investing should be employed when you can set aside a considerable amount to make some profits. However, you may lose more money (penalty) if you intend to withdraw your invested money (mutual funds) at a premature stage when compared to saving like Fixed Deposits.
Swing trading is a step beyond investing and you can think it over when you want high returns and are decided upon to take a certain degree of risk. Other parameters that include if you entertain trading is, preferences, risk tolerance, and stock market volatility.
Factually, if you have the guts to play risk in the stock markets then you can earn more profits, say 5% to 10% per month, effortlessly keeping in view the risk factors when you are in a trade. So, remember, although swing trades form a kind of trading style in stock markets involving high risks when compared to investing, do adopt it only when you find it comforting.
However, in a broader context you should adopt swing only if it suits your preferences, personality, objectives in a given scenario.
Comparison between Swing Trades & Investing
Period of Investment:
When you are into investing your money is in position for weeks, months, or even years. In case of swing trading you can hold positions for a few days to a few weeks.
In contrast to investing, swing trading will need more time, discipline, more time to monitor markets to adjust the positions.
For a short period, swing trading will generate higher return which involves higher risk, commissions, and costs than investing.
Swing trading is dependent on technical analysis and generates short term returns on the stock volatility. In investing, you will have to check on the fundamental analysis before you invest, validate its long term performance, and possible increase in the value of the underlying asset.
See lessHow do I Start Swing Trading?
How to Start Swing Trading in India You can begin your swing trading that gives short term returns with low risk, in fact, it is one of the best trading styles in the stock market. Before starting swing trading, you must understand the broader context of swings, and also follow a few expert tips thaRead more
How to Start Swing Trading in India
You can begin your swing trading that gives short term returns with low risk, in fact, it is one of the best trading styles in the stock market.
Before starting swing trading, you must understand the broader context of swings, and also follow a few expert tips that can support you in times of unpredictable volatility.
In a broader context, when you are determined to make your income on swing trades then the best way to make money is to avoid pitfalls in short term returns and continue to take advice as per the stock market gurus’ recommendations.
Avoid Pitfalls (losses):
Never begin your swing trading business on credit. This will ruin you the moment you tend to make losses in swing trading. Therefore, to avoid such risks, begin your trades with virtual money on paper trading sites.
To avoid loss, implement stop loss in every trade that you undertake and always sell out a losing stock or else you can lose your trading capital unnecessarily.
In swing trading, try to maximize your gains that in turn minimize losses, and to hold your profits you should apply trailing stop loss.
Market conditions may not favor your stocks, do not overtrade in such circumstances, your losses may engulf your earned profits until then.
Remember, When you reach a losing position, exit at the earliest and wait for the next opportunity.
Caution for Healthy Trading:
In a single trade, do not lose more than 2% to 3% of your trading capital. For instance, your trading capital is one lakh then your loss on single trade should not exceed 2-3K.
Do’s:
You may be tempted to draw expert advice from various quarters of stock market businesses. Be careful, when you seek advice, contact a well known stock broker or a brokerage company for queries and then decide on making your investment.
These advisors must have sought recognition from SEBI and they must possess credibility, and hold authentic values.
Dont’s:
You will find several advisors on social platforms such as Facebook, Instagram, etc., do not rely on them, you can be misled by exposing wrong charts, and trading signals that can eventually lead to a loss.
Later, legal support may not be able to pull you out of financial matters.
Tips to Succeed in Swing trading:
Being a beginner in swing trading does require an element of caution and preparedness to adopt the techniques to avoid financial losses.
Utilise the trading capital in investing different portfolios and follow the technical indicators which caution in trade movements.
Make use of a hedge on your stock investments and agree to risk money that is affordable to you.
Always Place Stop Loss Orders
Experts do recommend a specific range and you are advised not to enter or exit beyond it.
Stop Loss is a technique used to control the losses when you option put the bought stocks they can drop down drastically and move downward lower than the bought share price.
In such a situation, the price at which you set a stop loss can enable you to avoid losses when an option put is executed.
See lessDebt Free Penny Stocks Below 1 Rupee
1 Year Returs of Multibagger PSU Banks Bank CMP 1 Year Return UCO Bank 46 270% Bank of Maharashtra 47 150% Central Bank of India 51 150% Indian Overseas Bank 45 138% Union Bank of India 76 110% Bank of India 109 108%
1 Year Returs of Multibagger PSU Banks
How Stop Loss Helps from Huge Losses?
How do you Use STOP-LOSS Order The word "STOP-LOSS" itself indicates that it helps you to stop losses in the stock market. A stop-loss order is like a safety net for your trades in the stock market. It's like a helmet to a bike rider. Now, I will explain how it works and why it is helpful in tradingRead more
How do you Use STOP-LOSS Order
The word “STOP-LOSS” itself indicates that it helps you to stop losses in the stock market.
A stop-loss order is like a safety net for your trades in the stock market. It’s like a helmet to a bike rider.
Now, I will explain how it works and why it is helpful in trading, especially in intraday & swing trading.
For example, you bought a stock at 100 rupees, and you hope it will go up to 104. But if the stock starts going down instead, a stop-loss helps.
In this example, if your stop loss order is placed at 98, if the market get reversed and went till 85 is not an issue to you.
Your total loss in that trade is 2 rupees per share but without a stop loss the loss will be around 15 rupees per share.
Beginners who trade intraday and swing trading avoid using stop loss orders instead they lose their capital in a couple of days.
See lessWhy 90 Percent of Traders Lose Money?
Why 90% of the traders Lose Money in Stock Market The article speaks about the various factors that need to be borne in mind before starting your trading in stock market. It has been a record fact that about 90 percent of the traders lose their money in the stock market. Below lines help you to explRead more
Why 90% of the traders Lose Money in Stock Market
The article speaks about the various factors that need to be borne in mind before starting your trading in stock market.
It has been a record fact that about 90 percent of the traders lose their money in the stock market.
Below lines help you to explore the various factors that can enable you in stopping the impending losses in the stock market.
Why traders lose money in stock market
Most of the beginner traders in stock market are losing money and thus leading to frustration, pain and anguish.
Stock markets have different segments of trading that allow traders to trade in their specific area of interests. These segments are Intraday trading, options trade, and foreign exchange trade.
If you enter into any of these segments you will need a better understanding of the trading concepts to make money. Experts relate the percentage of traders having incurred financial loss is about 90 percent at the stock market.
Believe in Knowledge based Culture:
Stock market experts do advise new investors to get knowledge on the prevailing market conditions, factors that influence the price variations.
Before you plunge into stock markets to earn money you must have a perfect layout that defines in the following lines. You must define your risk tolerance, trading cycles, investment goals, etc.
Lack of wisdom causes mistakes and the probability of making profits on stocks can reduce considerably. To make profits in good proportion, you are recommended to undergo essential education and training.
You can improvise your educational and training skills by seeking information from books, seminars, course participation, and essential tips from the stock experts desk.
Online free resources, articles, videos and forums can serve to be absolutely informative. Exchange of opinions, and query posting can enrich your knowledge.
Beginner traders must experience a real time analysis by employing paper trading and back testing. You can gain virtual experience by employing your tasks to specially designed software tools.
Emotional Trading:
Market volatility can shake your emotions and draw you into hasty actions that result in heavy losses.
To keep up in pace with the stock market fluctuations you need to be objective oriented and remain disciplined when participating in trades.
Greed can pull you into swamp which means you may get charged up to play high risks and attempt to fulfil your irrational financial gains. In stock trades you will have to balance hope and regret in a skillful manner.
Being excessively hopeful can make you hold positions for a time that may cause damage to your underlying assets. Similarly, a wild guess can eject your profitable levels and you will have skipped opportunities in buying or selling the good stocks.
Alternate means to regulate your stock business when you get inclined to emotional trading. You must utilise the stock trading features established by the stock markets (BSE, NSE)
For instance, you must adopt stop loss to staple the financial loss component, Strike price is to define your urge to sell stocks. If you focus on the long term goals of trading strategy then your trading decisions will be more sturdy.
Traders’ Risk Management Control
You must lay out a clear cut plan that limits you from trading excessively and set goals for good returns before initiating the trading.
You must retain a conscious effort in setting limits that can manage the risk. You will have to set stop loss orders to limit losses, spread risk through the diversification of positions and never trade beyond your position sizing limits.
Avoid Over-trading:
Overtrading can be due to your participation in too many, often coupled with emotions or impulsive nature. Hence it is always suggestive to never cross your planned strategy.
If you perform overtrading, you will have to bear the high trading cost, slippage cost, missed opportunities, and even cause lack of focus and direction.
Applying Wrong Trading Strategy:
First, every investor has a unique personality, and can feel comforted only when you establish a specific goal set.
Second, adaptability to change is the key feature in stock trading and you must transform your strategies in accordance to market conditions and real-time experiences.
Third, you must maintain a great degree of understanding on your personal preferences and then apply the trading strategy. Be mindful, every chosen strategy may not be suitable in earning your predetermined goal set.
Fourth, you must adopt risk tolerance, screen time availability, and market talk and its sentiments.
Fifth, depending on your objectives, you must prefer intraday trading, long term investing or swing trading. Your choice of strategy should obtain results that match your investment goals.
From the concluding lines you must understand that you should never move in haste until or unless you haven’t chalked a clear cut trading strategy.
See lessHow to Select Stocks for Intraday?
Stock Selection for Intraday Stock Selection for intraday trading involves finding the stocks with high volatility in a single day. Here's a simple guide to select the stocks for intraday traders: Liquidity is the Key: Choose stocks with high trading volumes. High liquidity ensures you can buy and sRead more
Stock Selection for Intraday
Stock Selection for intraday trading involves finding the stocks with high volatility in a single day.
Here’s a simple guide to select the stocks for intraday traders:
Liquidity is the Key:
Choose stocks with high trading volumes. High liquidity ensures you can buy and sell shares easily.
High Volatility:
Look for stocks that have huge volatility, the stock price should fluctuate significantly during the day. This creates an opportunity for a day trader to execute multiple trades in a single day.
Price Action Patterns:
Technical analysis plays a major role for intraday traders.
Do a basic technical analysis like support, resistance, moving averages, and trendlines. Identify trends that can help predict price movements.
Follow Market News:
Stay updated with financial news and events affecting the stock market on that particular day.
Breaking news can influence stock prices, providing a huge volatility. The news that affects the stock price in the same day will give a good returns if you can identify it earlier.
Focus on Sector Performance:
Evaluate how a particular sector is performing. Stocks within a strong-performing sector are more likely to have huge potential for intraday trading.
These are some of the tips for those who want to trade intraday. I always suggest you to do your own research rather than taking buy/ sell calls from others.
See lessWhat is the Average Income of a Swing Trader?
Average Monthly Income of a Swing Trader A swing trader in India can earn a monthly income that is dependent on the initial capital, leverage, trading strategy, and tax implications. Below I have taken an example of 50000 investment. With a capital of 50000, practically how much a swing trader can eRead more
Average Monthly Income of a Swing Trader
A swing trader in India can earn a monthly income that is dependent on the initial capital, leverage, trading strategy, and tax implications.
Below I have taken an example of 50000 investment. With a capital of 50000, practically how much a swing trader can earn in a month was shown in the below sections.
Average Income per Month For INR 50,000 Investment
Let us maintain certain hypothetical assumptions to arrive at conclusions.
You as a swing trader can make an initial investment of INR 50,000.00 and obtain a leverage of 5x to trade a stock worth of INR 2,50,000.
In case, you plan to make 5% to 10% profit per trade and conduct about 10 trades per month.
That means, you will be able to earn INR 12,500 to INR 25,000 per trade or INR 1,25,000.00 to INR 2,50,000 per month for 10 trades.
Your net income will be total earning minus different taxes laid by your broker, IT dept, and others if any.
Expenditure Incurred in form of Services/Taxes:
Now, let come to the costs you incur in different ways, brokerage fees, stamp duty, securities transaction tax (STT), GST, and transaction charges to the broker.
Above all, you will have to pay income tax on your earnings every year, hence you will have to make a rough calculation that goes close to the net income left after taxation by IT.
Brokerage Charges:
Let us assume that your broker charges a fee worth 0.1% of the trading account capital. And, if you conduct a trade worth INR 2,50,000 then you will have to forgo brokerage fees worth INR 250.00.
In this manner, if you perform 10 trades in a month then you will be levied by INR 2500.00.
Your Net Income per Month: Swing Trade Earnings
In continuation to the above example given, you can calculate your net income earned per month for low profit margin (5%) or high profit margin (10%).
Low profit margin (5 %) Per Trade
Gross income – costs = taxable income.
INR 1,25,000 – INR 2,500 = INR 1,22,500
(Costs is the brokerage costs)
Taxable income – Taxes = Net income
INR 1,22,500 – INR 42,045 = 80,455
High profit margin (10%) Per Trade
Gross income – costs = taxable income.
INR 2,50,000 – INR 2,500 = INR 2,47,500
(Costs is the brokerage costs)
Taxable income – Taxes = Net income
INR 2,47,500 – INR 84,915 = 80,455
From the above cited examples, your net income per month will be INR 80,455 with a profit margin of 5 percent per trade.
Making a capital investment of INR 50,000.00 and obtaining a leverage of 5x from the broker can help you trade a stock worth INR 2,50,000.00.
Keeping all the dimensions the same, if you make a profit margin of 10 % per trade then you will be earning an income of INR 1,62,585 per month.
Income Tax on Individuals (FY 2023-24)
The Income tax Act does consider swing traders income as business income and the tax is levied on the basis of slab rates.
If you are an individual doing swing trading and are not yet 60 years of age will have to pay tax worth for FY 2023-24 is mentioned below.
If you earn an income of INR 3 lakh (Nill Tax), from INR 3 lakh to INR 6 lakh, will be 5%, from INR 6.0 lakh to INR 9 lakh you will have to pay 10%, and from INR 9.0 lakh to INR 12 lakh you will have to pay 15%. Whatever amount you earn above INR 12 lakh, you will have to pay 30%. Likewise, if your income goes above INR 50 lakh then you will have to pay an additional surcharge of 10% and a cess of 4 % on the total tax payable.
Ultimately, if you earn above INR 50 lakh, you will be under a higher tax bracket (30 % + 10 % surcharge + 4% cess) = 34 %.
See lessWhat are the Top 5 Strategies for Swing Trading?
Best Strategies for Swing Trading Although Swing trading is attractive for its short term returns with low risk all you need is you will have to master a strategy. Otherwise, your goal set may be unable to reach your niched objectives. Here is the list of top 5 strategies for swing trading that willRead more
Best Strategies for Swing Trading
Although Swing trading is attractive for its short term returns with low risk all you need is you will have to master a strategy. Otherwise, your goal set may be unable to reach your niched objectives.
Here is the list of top 5 strategies for swing trading that will give fruitful results when you master it. They can be classified as:
1. Simple Moving Averages, SMA:
SMA becomes the best technical tool to select the best option call and option put in the volatility of the stock market of your chosen asset.
SMA provides average price of an asset for a specific period, you can set a relation between current price and the SMA thus, enabling you in deciding the active trades.
The comparison between the current price and the SMA defines the available opportunities. For instance, if the Current Price is greater than the SMA, it is the right movement to enter the long positions. It means that the share market is experiencing a potential uptrend.
If the current price is less than SMA, then you must enter for the short positions and the market is said to experience a downtrend.
Experts suggest you to go for a longer hold as the shorter period length may not produce the accurate results due to sensitive volatility. If you believe in a longer period a fewer false signal may cause delayed signals.
2. Fibonacci Retracement
The Fibonacci Retracement strategy is a popular technical analysis tool derived from the Fibonacci sequence of numbers.
It is utilised to identify the support and resistance levels of an asset price movement in share markets.
How Fibonacci Works?
3. Trend Trading:
You can make profit on trades provided you enter the direction of the trend.
For your chosen asset price, you must apply moving averages, or trendlines for the identification of trend movements be it upwards, or downwards, or sideways.
If an asset is experiencing uptrend, then you must prefer to enter long positions to buy on pullbacks or breakouts. On the other hand, if an asset is experiencing downtrend, you should make a short position entry.
4. Reversal trading:
It sounds typical but yes, it is true, you can strategize to make profit from the reversal that means you should enter trading patterns that move in a direction opposite to the previously held trend.
You can identify such potential reversal trends by using indicators, support and resistance levels, etc.
For instance, you have observed a downtrend in your asset and suddenly you find a reversal thus making the chart appear bullish, or break above a resistance level. And, if you are eagerly waiting to utilise the reversal trading strategy then you must knock the opportunity and enter into long positions.
A converse to the above said can occur, an asset with an upward trend may show a reversal and enter into the or break below the support level. You should immediately jump into short positions and never let the opportunity miss out.
5. Breakout strategy:
You can adopt trading based on breakouts that are very well applicable to swing trading. And, here too for your chosen assets, you need to identify the potential breakout in the price movement.
You must identify the potential breakout by using chart pattern, support & resistance, and trend line
After identifying the breakout, you must enter the direction of it and conduct your trade activities and make a considerable amount of profit.
In a candlestick chart, if you draw a support and resistance levels for your asset then the movement you find signs of breaking above the resistance level, you must immediately enter long positions by making no delay. Likewise, if you find a sign of breaking below the support line then the trader should grab the opportunity and enter short positions.
See lessHow Much can Algo Traders Make?
Profitability with Algo Trading Algo trading will save your time and efforts but you must be cautious in deciding your trading strategy. The most important aspect of trading is the predictions of trade positions such as entry/exit. Depending upon the kind of trading strategies you consider you willRead more
Profitability with Algo Trading
Algo trading will save your time and efforts but you must be cautious in deciding your trading strategy.
The most important aspect of trading is the predictions of trade positions such as entry/exit.
Depending upon the kind of trading strategies you consider you will have to take the relevant factors and run the strategy.
The algos function in its logical manner thus provides more accurate and precise results when compared to manual trading.
Factors that are taken in account for Trading Strategy:
You will have to utilise mathematical and quantitative tools like probability, regression, and calculus to obtain a well defined trading strategy.
The trading strategy must be backtested by collecting historical data to judge the viability of the selected strategy based on past market experiences.
During trading sessions, you may encounter a situation where the market moves in the opposition direction, a way different from your expectations. In such situations, you must employ the risk management techniques.
But such trade movements occur when there is a drastic change in political dimension, or transition in the technology. However, you are expected to trade only by weighing risks to gains.
Profitability is directly proportional to the trading strategy that deploys coding by the help of programming languages.
Algo trading can benefit traders when they operate multiple trade orders. Here too, depending on the conditions set you can obtain results with greater speeds and accuracy thus leading to higher profit margins.
Are you a trader? Then do Rely on Algorithmic Results
Trading desks, or consultancy firms help you earn at a much faster pace because of the transition from manual to algorithmic.
And, if the reasons are summed up, you can find it as:
The algo process involves zero human emotions.
The algorithm machine works with greater speeds and produces higher accuracies. For instance, a professional trader may take ten to fifteen seconds to identify the trade entry/exit forms. But in that period, the algorithm gives solutions that comprise many identifiable entry/exit levels.
Scalability: It is a technical term that states that the machine scans thousands of trading signals with tremendous computational power that humans fail to do so.
Portfolio and risk management: The machine logic can generate the best portfolio and also identify the possible risks to avoid in time.
Algo Trading Shall be the Future
Traders conducting stock trading at NSE/BSE can give a try for algorithmic trading. You can take the best advantage of technology driven industry when stock exchanges are coming forward to educate it.
SEBI has conducted a detailed study on the algos and proposed a framework for the participation of the retail traders.
You must have the technical knowledge of programming logic and quantitative logic to apply it in your trading strategies.
With the evolution of algo trading, you can make big profits if you utilise the algo services rendered by the notable companies like Zerodha.
See lessWhy PR Sundar’s Workshop is so Expensive?
‘Why Is PR Sundar's Workshop So Expensive?’ In words of PR Sundar PR Sundar sir has given a clarity on why his workshops are so expensive. Here are the lines that was spoken by him on his YouTube channel. I was pretty impressed when I saw the logical explanation provided by PR Sundar when asked whyRead more
‘Why Is PR Sundar’s Workshop So Expensive?’ In words of PR Sundar
PR Sundar sir has given a clarity on why his workshops are so expensive.
Here are the lines that was spoken by him on his YouTube channel.
I was pretty impressed when I saw the logical explanation provided by PR Sundar when asked why the futures and option training programs under his guidance are heavily charged.
After listening to his argument I clearly understood the gravity of his (F&O) training programs and why those training hubs have been mushroomed by the enthusiastic investors of the stock markets.
At (F&O) workshops, he teaches several strategies, and helps to understand capital diversification.
Before I begin with, let me illustrate the basic system of training that is provided by Mr. PR Sundar. You can attend online training programmed and offline training programs and they are located in Chennai, Hyderabad, Bangalore, and Mumbai.
Online Classes:
In most of his digital training programs, you will find 50 percent of the time provided in learning through pre recorded digital classes and another 50 percent of the time is contributed to the live video zoom sessions where the course participants are given one on one query clarification sessions also.
You are free to approach the faculty (PR Sundar) after going through the pre recorded classes. Here, you must note that the offline classes are more expensive than the online classes as the course participants are provided with 100 percent live classes.
PR Sundar Offline Courses:
The offline course participants will be extended with knowledge on futures and option trading, a free hand-holding. It is for a period of 2 to 3 months and shall be extended to the first four batches. An impressive discount shall be provided to the course participants.
Offline workshops are charged more than the online, you will have to pay for hotel bookings, travel expenses, and so on.
You will get 18 hours to interact with PS Sundar in the two day workshop.
You will be participating in a 100 % live interaction with the faculty ( PR Sundar).
He speaks in an air of confidence in a manner but doesn’t promise that you will earn your investment done in participating in the free hand-holding F&O course.
Typically, after the course completion, you will be able to earn a return of 3 to 5 percent on your capital investment. Your return on investment may differ if any untoward stock market incidents occur.
Important Note:
You are strictly instructed to attend the course only when you are sure to do F&O trading with a capital investment of INR 25,00000 and above only.
Anybody less than that capital investment is not advised to participate in the futures and option (F&O) training program.
If you tend to calculate the percentage of the capital investment that goes into the offline training program is only 3 percent that means it will be somewhere around INR 70,800.00 inclusive of GST.
Workshop Structure:
With PR Sundar you can learn three things:
1 day workshop (10 lakh capital investment) Course content involves:
2 day Workshop (25 Lakh Capital Investment) Course Content Involves:
Even after providing so many benefits, you will be surprised to hear that the course fee (futures and option trading) has created a huge cry on the Internet.
Collared Option Strategies Course for a Low Capital Investors:
PR Sundar doesn’t want to dishearten low capital investors, if you can make an investment of about 1 to 3 lakhs then you can join another course. For example, Collared option strategies does concentrate on adjustment for the iron collared option strategy and even provides 5 pre recorded videos, and one FAQ video session. It is provided to the first 100 course participants on the iron collared option strategies where you can find most common doubts and queries on the subject. You can register by clicking the link on the collared option strategy web link page.
See less