Why Swing Trading?

In trading there are countless ways to describe trading strategies and techniques. Day trading, Swing trading, Momentum trading, Trend trading, Scalping, Arbitrage, Spread trading, Pairs Trading, Moving Average, Stochastic, RSI, etc. Each has their pros and cons however the average trader remains unprofitable regardless of which trading technique they implement. However banks, brokers, and everyone else with their hands in the pot make more money when volume is higher. Take a look at the following chart. The chart shows the number of searches on Google for the terms "day trading" and "swing trading". Notice that "day trading" is searched far more than "swing trading".

 

Does this give Swing Trading Strategies an Edge?

The number of investors searching for a day trading strategy is well ahead of those searching swing trading strategies. There are 2 main reasons which we believe account for this anomoly.

1. Brokers are paid based on a per transaction basis. Therefore brokers are more likely to promote higher frequency trading systems in order to make more money when the trading strategy produces a signal.
   

2. Daytrading provides a high yield investment opportunity for those who can do it successfully. As humans, we have a tendancy to want to hit the jackpot, however it is far more difficult than one may imagine to consistentantly be a profitable day trader.
   

What is the edge?

The biggest reason we believe Swing Trading strategies are the most reliable approach is due the ones inability to pick tops and bottoms. To successfully day trade, one must pick tops and bottoms very accurately to cover trading costs. With swing trading, there is margin for error, so even without picking exact tops and bottoms there is still potential for profit.

 

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