We all know that swing trading is very much rewarding when we select the right stocks and do the right execution. But do you know how to make perfect swing trades that are actually profitable? Most of the traders, almost 90 percent of them, lose money in intraday trading without having a proper strategy. But another 60% of them lose money in swing trading too because of a lack of trading knowledge. 

Do you want to know what it takes to become profitable at swing trading or positional trading? Read this blog post to take more profitable swing trades. But before that, let’s know why swing trading has more hit rate than intraday trading. 

Why Is Swing Trading The Most Profitable Form Of Trading? 

As you know, intraday trading is an art to practice as it has too much to and fro. Also, there are many false alarms when we trade intraday without understanding the market structure in a better way. But swing trading is as smooth as it gets with confirmed signals. Not to forget, you can get a favorable risk-reward ratio when you are trading positionally. 

 Now, you might be waiting for the holy grail of swing trading. Here’s everything you need to make your swing trades lucrative.

1).  Be With The Right Trend 

The number one thing you need to do profitable swing trading is – to stay with the trend. If you are in a bearish market and taking bullish swing trades, then the chances of getting your stop loss hit are pretty high. So your thumb rule should be to stay with the trend while taking positional bets.

2)  Learn Price Action The Right Way 

Many price action patterns help a trader realize what the security or stock is trying to do and the probable targets and stop loss. If you are on the long side, know patterns that work pretty well there. Similarly, you should learn price actions that work when you short a stock or the market if you are on the short side. 

Flag and pole, falling channel, wedge, inverted head, shoulders, etc., are some of the price action patterns that work perfectly in a trending market. Moreover, always trade the retest of a breakout, and you will find yourself with a better win percentage. Want to learn more about how to trade retest of a breakout? Read this blog.

Want to learn more about such price action patterns? Join our mentorship program to know more.Similarly, if you are on the short side in the future, you should know bearish price action patterns like head and shoulder, inverted flag and pole, rising channel, etc. Once you know these patterns like the back of your hand, half your job is done. Want to know the next half? Here’s the rest of it. 

3)  Set A Realistic Stop Loss & Target

Now you have a pattern with you, all you have to do is – execute. Well, that’s the most tricky thing about swing trading. People look at a pattern and think that this will give profit if entered here. The thing is, they don’t act, and after ten days, they see the stock and say – oh, it’s ten percent up, it would’ve given me a good profit. 

You need not do this, instead, you need to act upon the setup when you spot a powerful one. When you enter a trade, you should set your stop loss around a meaningful pivot – support or resistance, depending on your trade side. 

Also, some people set a stop loss and forget the trade. The trade keeps running, sometimes in their favor, sometimes against them. Eventually, it comes and hits the stop loss. You shouldn’t be that somebody. Always have a perfect exit target in your mind. Preferably, for swing trades, you should keep a target of a minimum of five percent. Notice it again minimum of 5 percent with a time-bound. Yes, that’s realistic and not hyper imaginative. Why? People keep their hard-earned money in a bank FD for one year, and they get five percent returns per anum. If you can get those returns on your capital in one or two weeks, how’s that bad? Don’t be greedy while swing trading. If you see a great opportunity, then you should keep trailing your stop loss after every five percent increment in your P&L report. 

4)  If Price Action Is King, Data Is Its Crown…!!

Knowing just the price action of a stock is not all. You need to know the data behind it as well. We here at Trading Cafe India make use of an advanced customized tool, Tredcode, to be in line with the market data. 

Here are some essential data factors to keep in mind while planning swing trades: 

—   Always look at option chains for heavyweight stocks and indices like Bank Nifty, Nifty, Reliance, HDFC Bank, etc. Option chain reveals more than simple price action and trading tips. Want to know the secrets of Data in trading? Check out our daily YouTube Videos where our trading mentor Chinmay unearths the hidden gems of option chain analys

—   Along with option chain analysis and price action, you should look out for volume action too. You need to see if there’s any unusual activity in stock volume data before taking any entry. If the volume is low and the price goes up, it indicates that weak hands or more retailers are buying the stock. Similarly, if a stock is in a downtrend, but the volume is declining with each passing day, it means that weak hands are selling. And what does the market do to remove the soft hands? It shakes them off…!! So you need to be aware of the volume action and accordingly take your positional bets.

5)  Trading Psychology In Positional Trading

If you can get better at trading psychology, no one can stop you from succeeding at swing trading. What’s the number one rule to get strong at trading psychology? Here’s the holy grail:

Once you enter a trade, don’t analyze your stock. Most retailers do this – they analyze the stock after taking a position in it. Do all the analysis you have to do – price action, data-wise, fundamentally, but do it before entering into a trade. Once you are in there, don’t let fear, greed, or joy control you. Know that there are only two ways after you enter into a trade – stop loss or target. This way, you can improve your trading psychology and do lucrative swing trading for sure. 


So this was the five-step solution you need to follow if you want profitable results in swing trading. Now, we hope that you can do profitable swing trading. Want to know more about how to do multi-bagger swing trading? Join TCI’s all-new masterclass..!! 




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