Is swing trading is good or bad?

Are you good at trading by utilising technical analysis? All, just to make profits in short-term price swings.

If so, fine, you are one of those skilled brains to work on swing trades. Swing trading can be applied during bull/bear trends, and even while the stock swings are relatively stable.

The basic funda of making swing money is to hold positions for a few days to few weeks until you capture the short-term price movements which results in profit earning.

Why is swing trading risky?

Yet, the swing trades create a hostile environment due to its functional characteristics thus representing a series of setbacks while trading and such disadvantages can be evidently spoken as:

• Your investment can get exposed to risk at different times, such as overnight or weekend market fluctuations. In the Indian scenario, at NSE/BSE, the stock markets create a peculiar trendset, in the beginning of the week say Monday, the market is buyers market, and Friday, and Saturday the trading activity spirals and you can observe the selling trends go high. Therefore, you can see the market fluctuations taking sharp highs and deep low dives. As an effect of the applied risk, your funds may experience a drawdown or cause huge losses.
• When you engage in short-term swing trading to book profits there is an equal possibility of missing out on the big picture in long term opportunities or signals. Long term trading includes option selling, future and options (F&O) that generates more profits and less taxation burdens.

If you make good earnings on swing trades then there is every likelihood of losing a significant portion of your returns in the form of short term capital gains, in which you will be levied to pay higher taxes.

In addition you shall be subjected to commissions, fees and spreads that aggregates more financial burden on you when compared with buy-and-hold (long term investment) investors.