Swinging Scalpers
Scalper traders and Swing traders are often classed separately when it comes to their investment practices, but in fact the only major difference in their strategy is the length of time in which they hold their position in a particular market. Scalper traders technically seek out short term investments where they expect a return on investment in as little as a few hours of trading. Scalper traders are usually day traders as they take positions in different markets at the start of the day’s trading with the hope of profitably squaring off these positions by the end of the day’s trading, as these positions are never held overnight. The idea is to take many positions daily in the hope that the markets move in the predicted direction, gaining the trader a small profit on each position they held. Swing traders, mostly being in fact fundamental, on the other hand may take fewer positions in the markets but they aim to do it over a longer period of time and for a substantial increase in the potential profit returned in comparison to that of a scalper/day trader. A swing trader’s position can be held for days or weeks and as a rule of thumb they generally don’t take a position with the intention of squaring off at the end of trading on that day.
Putting their differences aside you will see that there are many similarities between scalper and swing traders, in fact most successful traders from each classification share the same methods and investment techniques. The main key for being successful in both types of trading lies in a trader’s research ability. Both types of trading call for continued research in the markets so one can start seeing and predicting trends. This research is based on fundamental analysis which provides an overview of the markets by looking at historical and present data. A trader was looking to invest in the markets, will look at the factors which will affect the supply and demand of a particular financial instrument. For example if a trader was looking to invest in the forex markets he/she will have to factor in the political and economic climates of countries that can affect his/her investment, if there is a change in their position. Thorough analysis is essential as without it traders will be relying on luck to execute successful trades.
Historically Scalper trading and Swing trading are the two types of investing that appeal mostly to new investors looking to make investments in financial spread betting and this is with good reason, as it allows people outside the finance industry a better opportunity to make profits within the financial markets by doing thorough research and keeping up to date with relevant trends/factors.
Below are a few tips to help you on the way to becoming a successful trader, whether you are intending to become a scalper or a swing trader.
- For short-term trading profits always look at the history of the particular stock/market you are interested in. History can give you an idea of how the stock/market performed through similar events that already occurred.
- Timing is everything. Knowing when to take up a position as well as when to exit a position is very important as collectively they will determine whether a trader makes a profit or loss.
- Be on the lookout for shorting opportunities. Most people are aware that they can make a profit if a stock rises in price but you may not know that you can also make profits from stocks decreasing in value. For example a trader thinks that stock ‘a’ which is currently valued at $100 per share is going to fall, he/she will take this position with their broker and let’s say the stock falls to $80 per share; the trader can then square off their position making themselves a profit of $20 per share. This practice is referred to as ‘shorting’
- Research and more research. Keeping up to date with all factors that can possibly affect the markets you are trading in is essential if you are to be successful as a trader. The most successful traders are the ones that do the most research and technical analysis.
