Swing Trading as an alternative to investing in real estate

by Carlos
3 Minuten
Swing Trading as an alternative to investing in real estate

Anyone considering trading in shares as an alternative to investing in real estate is faced with the question of the right strategy. This is especially important if you are more of a chartist than a fundamentalist. Fundamentalists try to derive the future course of a security from the inner values of a company (key figures, such as turnover, profit, etc.). Chartists, on the other hand, assume that all current information is already reflected in the price. He starts, so to speak, from the previous movements of the chart and tries to derive the future based on this. One of these strategies is swing trading.

On the page of The Robust Trader you can find an excellent introduction to the topic of swing trading and whether this kind of trading can be profitable. If you now think you can get concrete stock tips, you are wrong. A strategy is always independent of the respective securities. It does not matter whether it is a solar company or a fish canning company. Even the market is not that relevant. One can trade whole indices or in foreign exchange trading (Forex) with currencies.

Swing trading moves in the middle investment horizon. Day traders trade within a trading day and hold positions practically never overnight. Long-term investors who trade trends hold positions for weeks, months and sometimes even years. The Swing Trader takes advantage of short-term movements. He holds these positions for a few days, at most a few weeks. In doing so, the Swing Trader recognizes the big trend, which is usually stable for months or years. Within this trend he waits for a counter movement. If this occurs, he re-enters the direction of the major trend, but exits after a certain time, usually when a significant technical resistance line is reached.

The trick now is to find the right entry and exit signals. There are again countless possibilities for this. A more optical possibility is to recognize resistance lines at reversal points of the price, which define a trend. Another is to use the candle notation to identify particular combinations of price movements and use these as entry signals. For the exit there is also the possibility of the combination with a long-term investment strategy. At a prominent point you sell half of your position and thus secure profits. The other half is hedged with a stop-loss and is kept in the long-term trend.

No matter which swing trading strategy you follow, the important thing is that you risk a maximum of two percent of your portfolio at any one time. Even if it should be tempting to trade with larger positions, the mathematical derivation is clear and speaks for risking only small positions.