Understanding the principles behind day and swing trading


Hi all,

I'm looking very broadly at how you make a profit out of these methods and I just wanted a confirmation of whether I've basically got it right. I see there is a lot more to it in terms of how you carry it out but just the basic principle.
So say I see a stock has positive momentum over the course of a couple days and I decide to jump on the bandwagon. I set a profit limit of 1.5% and a loss no more than 1%. I then wait around or perhaps it can be automated? until the share price reaches the 1.5% profit or 1% stop loss limits and then sell. Say I bought £10k worth of shares, I then either have £150 or I've lost £100 excluding taxes which, broker fee's. Now I realise a lot of this rests on how many wins vs losses you manage to get and wins to some extent make up for the losses but you still need over 40% wins, is there anything I'm missing, do fee's/taxes really eat into every trade at this level? Does this also mean its not necessary to use leverage if you're happy with these numbers? The thing I forget is that it looks easy when you can see historically what a share has done over several days.

Thanks for the advice.


Hi guys, since i posted this I have recently done a few trades over the course of a week or so but done through a share dealing account & probably due to the current Bear market I have made a profit-this should probably not be taken as "the norm" with such high price changes over short periods? Also it was easier as there was a big dip followed by a small recovery which was probably somewhat predictable. But guessing opportunities can be found at any time if you know where to look. Anyway this was a dip my toe in short term trading. I suppose i could keep doing this, I guess you'd call this swing trading. I admit i did not obide by the rules above in any way i just waited until i went into a profit i was happy with.

Day trading seems a whole other thing and was looking at spreadbetting and CFD's-i get how they work but there you definitely need a risk management strategy but primarily i wonder if trying to predict the markets over the course of secs, mins, hours really is just random gambling.
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