Basics of Swing Trading | How to sell in a few days to a few weeks, and what to decide before starting

Long-term investing feels like it takes too much time. On the other hand, day trading, which requires watching stock prices while at work, is impossible. That is likely when you come across the term “swing trading.” If you look it up, you will see phrases like “profit in a few days” and “even company employees can do it,” so many people are likely interested.

However, swing trading requires attention to different areas than long-term investing. If you start without knowing the mechanics, you will easily be swayed by price movements while holding the stock.

In this article, I will explain what swing trading is while comparing it to long-term investing and day trading. After that, I will write about the flow of a single trade and what to decide before starting, using concrete numbers. By the time you finish reading, you will be able to decide whether to try swing trading. If you do try it, you will also know what to decide beforehand.

Swing trading is buying and selling while holding for “a few days to a few weeks”

What you will understand in this chapter is how swing trading differs from other types of trading.

Swing trading is a method of buying a stock and selling it within a few days to a few weeks. Stock prices do not move in a straight line every day; they repeat waves of rising and falling. You aim for one of those waves. It is a method of buying at the beginning of a rise and selling before it finishes rising. Terminology explanations from companies like Matsui Securities and OANDA also define the holding period as “a few days to a few weeks.”

Comparing it to other methods makes the differences clear.

Day trading does not carry stocks over to the next day, so you do not have to worry about price movements during the night. In exchange, you cannot leave the screen during trading hours. While long-term investing requires fewer checks, it takes years to see results.

Swing trading is in between. Since checking stock prices at night after work is sufficient, it is considered something that people with full-time jobs can engage in. However, because you hold the stock through the night and over the weekend, you are also affected by events that occur while you are not holding it. I will write about this point in detail in a later chapter.

People who are suited for it and people who are not

What you will understand in this chapter is a guide to check if swing trading suits you before trying it.

It is suited for people who can take some time to look at charts at night. A chart is a graph of stock price movements. In swing trading, you look at this graph to confirm “is this an upward trend?” before buying. It is a method that is easy for people who can build the habit of looking at it a little every day to adapt to.

Another point is being able to sell according to the rules you have set. Since it is a method of selling in a few days, you will let go early if it does not move as expected. If you keep holding it thinking “it might return eventually,” what you intended to be a swing trade will unknowingly become a long-term “salted” (stagnant) investment.

Conversely, people who cannot focus on work just because the stock price drops a little need to be careful. Swing trading involves checking stock prices more often than long-term investing. If your feelings are swayed every time you see a price movement, it is safer to first get used to the time when you do not look at stock prices through long-term investing.

People who intend to use living expenses or money that will be used in the near future should also not start yet. If you try to increase it in a few days, you will want to increase the amount per trade. Of the three boxes mentioned in the main article, the one used for swing trading is only the individual stock money box. Please try it within the limit of that box.

The flow of a single trade

What you will understand in this chapter is the procedure for doing one swing trade.

The flow of one trade takes the form of preparing at night, placing an order the next day, holding it for a few days to a few weeks, and then selling. Written in order, it is as follows.

1. Open the chart of the stock you are interested in at night and see if the stock price is in an upward trend

2. Write the three things to decide before buying (reason for buying, selling price, stop-loss line) in your investment notebook

3. Place an order to buy for the next day

4. Once purchased, place orders for the selling price and stop-loss line using your brokerage app

5. Check the stock price only once every night

6. If the price reaches your selling price or stop-loss line, it will sell. If the deadline arrives without reaching either, sell on the deadline date

7. Record the results in an investment notebook

For the stop-loss line order mentioned in the fourth step, use a ‘stop order’ (gyaku-sashine). A standard order is placed as ‘buy if it drops to this price’ or ‘sell if it rises to this price.’ A stop order is the opposite: it allows you to decide to ‘sell if it drops to this price.’ Even if you cannot watch the stock price while at work, the sale will be executed automatically at your set price.

The ‘deadline’ mentioned in the sixth step is often overlooked. Since swing trading is a method of targeting waves, there is no reason to hold onto a stock that hasn’t moved for weeks. By deciding on a deadline before buying, such as ‘sell if it hasn’t moved in three weeks,’ you can prevent yourself from holding onto it indefinitely.

Quantifying the three things to decide before buying

This chapter explains how to write down the three things you need to decide before buying in swing trading.

When watching several popular swing trading explanation videos, the content focused less on how to read charts and more on ‘deciding on your exit before you even buy.’ The exit refers to both the price at which you sell when you make a profit and the price at which you sell when you incur a loss. The three things to decide before buying mentioned in this note apply directly to this.

Let’s write this out using a hypothetical example. Suppose you buy 100 shares of a stock priced at 1,000 yen.

If you sell at 1,100 yen, your profit is 10,000 yen. If you hit your stop-loss at 950 yen, your loss is 5,000 yen. The point is to make the range up to the selling price larger than the range down to the stop-loss line. By setting it up this way, even if you only succeed half the time, your capital is less likely to decrease (excluding commissions and taxes).

Do not change the numbers you decided here after you have bought the stock. As the stock price approaches 950 yen, you will want to lower your stop-loss line, thinking, ‘It might bounce back if I wait a little longer.’ Once you lower the stop-loss line once, you will want to lower it again next time. Not changing the numbers you have decided is the foundation of this method.

Deciding in advance the amount you are willing to lose in one go

This chapter explains how to decide how many shares to buy in a single trade.

Once you have decided on your stop-loss line, the next step is to decide the amount you are willing to lose in one trade. In overseas investment explanations, the concept of ‘risking no more than 2% of your capital in a single trade’ is often introduced. In the swing trading explanation videos I watched, some creators also used 2-3% as a guideline. This number is not a rule. Please choose an amount that makes you feel like you can still go about your day normally the next day.

Let’s assume the money used for swing trading is 500,000 yen. The amount you are willing to lose in one go is 10,000 yen (2% of 500,000 yen).

The calculation is ‘amount willing to lose in one go ÷ loss per share.’ The wider the range to the stop-loss line, the fewer shares you can buy. In Japan, the standard is to buy in units of 100 shares. If the calculated number of shares is less than 100, there is also a method of using fractional shares that can be bought from a single share.

When thinking in this order, the number of shares is determined by the ‘amount you are willing to lose’ rather than the ‘number of shares you want to buy.’ You will want to buy more of the stocks you like, but the number of shares should be determined by calculation, not by your feelings.

Three situations to be careful about

This chapter covers the specific precautions unique to swing trading.

When crossing over a financial results announcement

Financial results are the report cards that companies release every three months. When financial results are announced, stock prices can move significantly in a single day. Even with good content, prices can drop, and it is said that the movement after an announcement is difficult to predict.

If you hold a stock for a few days to a few weeks in swing trading, the financial results announcement date may fall within that period. Before buying, check the company’s financial results announcement date on your brokerage app or the company’s website. If the announcement date falls within your holding period, it is safer to decide whether to sell before the announcement or to skip the trade.

When major news breaks at night or on the weekend

You can only buy and sell Japanese stocks during the day on weekdays. If major news breaks at night or on the weekend, the first price the next morning may suddenly start much lower. Because it starts by jumping from the previous day’s closing price, this is called a “gap.”

In this case, the stock may be sold at a price lower than the stop-loss line you set with a stop-loss order. Even if you set the stop-loss line at 950 yen, if the first price in the morning is 900 yen, it will be sold at nearly 900 yen. A stop-loss order is a very useful tool, but it does not guarantee that you can stop your losses exactly at the stop-loss line. Keeping a little buffer in your share count calculation from the previous chapter is also to prepare for this scenario.

When buying and selling in a NISA account

Swing trading in a NISA account can cause problems. While NISA allows the tax-free quota for sold stocks to be returned, it is only returned in the following year. According to explanations from Monex Securities and the Financial Services Agency, the quota cannot be used within the year of the sale. Furthermore, the amount returned is based on the purchase price, not the sale price.

Another point is that losses incurred in a NISA account cannot be offset against profits made in other accounts. Since swing trading involves frequent stop-losses, this point also has an impact. It is easier to organize your thoughts by using the NISA quota for stocks or investment trusts you intend to hold for a long time, and trying swing trading in a taxable account.

Writing down results in an investment notebook and reviewing them

This chapter covers how to review your progress when continuing with swing trading.

After you sell, write the results in your investment notebook that same day. Do not just write down whether it was a profit or a loss. Also, write down whether you were able to act according to your rules. In the explanatory video we watched, keeping records was cited as the biggest factor that makes a difference.

Even if you end up with a stop-loss, if you acted according to your rules, that trade is not a failure. Conversely, if you lower your stop-loss line and it luckily recovers, mark it with an “X” even if you made a profit. This is because repeating trades that only succeeded by chance will eventually lead to a large loss.

Once you have accumulated five trades, look back at your notebook. If there are many “X” marks, it is possible that your rules do not suit you or that the amount per trade is too large. In that case, reducing the number of shares or taking a break from swing trading to return to long-term investing is one option.

Conclusion

Swing trading is a method that aims for stock price waves over a few days to a few weeks. Because you can prepare at night, you can do it even if you have a full-time job, but you are affected by financial results and news that occur while you are holding the stock. What you decide before starting are the three things to decide before buying (reason for buying, selling price, and stop-loss line), the time limit, and the amount you are willing to lose in one trade.

How much money to allocate to investment and how to divide it into three boxes are summarized in the featured article “What Stock Beginners Should Do in Their First Year.” Before trying swing trading, please first set your limits there.

What Stock Beginners Should Do in Their First Year ↓

Reference Materials

• Matsui Securities “Swing Trading” Glossary, OANDA Securities “Swing Trading” Glossary (Accessed November 2026)

• CREX, jioinc (Invest Leaders) Swing Trading explanatory articles (Accessed November 2026)

• Monex Securities explanatory article on reusing NISA tax-exempt quotas, Financial Services Agency “New NISA” materials (Accessed November 2026)

• SuperMoney “2% Rule” explanation (Accessed November 2026)

• YouTube “[Personal Experience] I will talk about 3 points for starting swing trading with 300,000 yen.” ([Kabu-Tan] Swing Trading Classroom, July 2026)

• YouTube “[You will never win if you don’t do this] I will teach you 3 tips for making money with swing trading” (Terada Swing Trading Professional Investor Channel, August 2026)