What is Swing Trading? 3 Reasons It Suits Office Workers
You open your stock app on your phone during your lunch break.
Even during afternoon meetings, those numbers won’t leave your head.
“Maybe investing while working is just not for me.”
I imagine some of you are looking into what swing trading is while feeling that kind of frustration.
I was in the exact same place.
So today, as a part-time trader who has walked the same path, I will speak honestly.
What is Swing Trading
Let’s start with the answer.
Swing trading is a style of buying and selling that captures waves of price movement over a period of several days to several weeks.
Stock prices do not move in a straight line.
They go up, then down, then up again.
They move while swaying like waves.
You aim to capture only a “portion” of those waves. That is swing trading.
You don’t aim for the perfection of buying at the bottom and selling at the top from the start.
Roughly speaking, it is a style of “holding for only a few days to a few weeks and selling based on set criteria.”
That is what stock swing trading is.
Differences from Day Trading and Long-term Investing
The following two are often compared to it.
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Day trading: Buying and selling within a single day. You must keep watching the screen during trading hours
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Long-term investing: Holding for a period of several years to several decades. You don’t pay much attention to daily price movements
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Swing trading: The middle ground. Holding for several days to several weeks
For office workers who have jobs during the day, day trading is not realistic, is it?
On the other hand, long-term investing takes a long time to see results.
Swing trading is an option that sits right in between.
3 Reasons It Suits Office Workers
Honestly, I believe swing trading is a style that is compatible with people who have other jobs.
There are three reasons.
Reason 1: You don’t have to watch the screen during the day
Since the holding period is several days or more, there is no need to track price movements on a minute-by-minute basis.
Checking the charts after work is more than enough.
Reason 2: You can place orders in advance
There is a mechanism called a “stop-loss order.”
This is a pre-set order that says, “Sell if the price drops to a specified level.”
If you set this, it will act exactly as you decided even while you are at work.
Being able to reduce the room for emotions to interfere is a reassuring point.
Reason 3: You can increase the number of times you review your trades
A single trade ends in a few days to a few weeks.
Therefore, you naturally have more opportunities to reflect on “why you bought” and “why you lost.”
Formulate a hypothesis, verify it, and improve.
Being able to easily cycle through this process is also a benefit of swing trading.
Weaknesses you should know about
Of course, it is not all good news.
You hold stocks overnight or over the weekend.
During that time, news may come out that causes the price to change significantly.
When the price starts the next morning at a level far from the previous day’s closing price, it is called “gapping.”
This is unavoidable in swing trading.
A common case is holding a stock through an earnings announcement (an event where a company discloses its performance) and seeing it drop significantly overnight.
Therefore, we prioritize “not losing big” over winning.
Also, I will be honest here.
It is not suitable for people who want to make a lot of money quickly or those who seek daily thrills.
It is a plain, almost boring type of trading.
Failure is a problem of the system
From here on, let me talk about my own experience.
At first, I was a completely terrible investor.
I would buy because it felt like it might go up, and pray when it went down.
When I made a profit, I would sell immediately because I was afraid of it decreasing.
My funds were only ever decreasing.
At the time, I blamed myself, thinking, “I have a weak will.”
But I don’t think that anymore.
The reason things don’t go well is not a lack of willpower, but “a lack of a system.”
I had no set reasons for buying, nor any criteria for selling.
That is why I had no choice but to make decisions based on my emotions in the moment every time.
I would feel anxious looking at unrealized losses and panic when looking at unrealized gains.
That is a natural reaction for any human, isn’t it?
What I should have blamed was not myself, but the method that left me no choice but to rely on my emotions.
After much trial and error, I now strictly follow a “template” that takes 15 minutes a day and allows anyone to reach the same conclusion.
There is no flashiness or secret trick to it.
In my case, I make decisions based on the principles of “don’t enter if you’re unsure” and “decide on an exit before buying.”
I have compiled the specific rules in a paid note.
However, some of you might be thinking, “I don’t feel like I could follow the rules even if I made them.”
I understand that feeling well.
That is why I decided not to leave it up to my own willpower to follow them.
When I buy, I place a stop-loss order at the same time.
By doing this, there is no room left for prayer.
A daily routine that takes 15 minutes
Once you have a template, the landscape of your daily life changes.
I don’t worry about stock prices during meetings.
I look at the charts for just 15 minutes after the kids are asleep, and if there is nothing to do, I close them.
Even if I have unrealized losses, I don’t panic because I have already decided on an exit.
This kind of calm time was what I had been looking for.
Even on days when I lose, if I can think, “I acted according to the rules,” I don’t have to blame myself.
As small “I did it” moments accumulate, the fear of investing gradually turns into confidence.
Today’s small step
You don’t need to buy anything today.
Instead, please try doing just one thing.
Recall one past trade and write down in a memo “why you bought it” and “why you sold it.” That is all.
If you couldn’t write the reasons well, that is a sign that you “didn’t have a system.”
It is not material to blame yourself with, but a starting point for improvement.
For those who have never traded before, just decide where in your day you will set aside the 15 minutes to use for investing.
That is enough.
There is no need to rush. As long as you survive, you can start over as many times as you need.
I have compiled the “template” that allows you to make decisions in 15 minutes a day into a paid note.
I explain the six steps of market environment, trends, stock selection, buying, selling, and exiting with specific conditions and procedures (Japanese stocks, revised edition).
I have also written about my losing years and the limitations of my verification without hiding anything.
▶ Read “The 15-Minute-a-Day Stock Investment Template”
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Note: This article is intended to provide information based on personal experience and does not recommend the buying or selling of specific stocks. Please make investment decisions at your own risk. Stock investment carries the risk of principal loss. This article does not constitute investment advisory or agency services as defined by the Financial Instruments and Exchange Act.