15 Swing Trading Mistakes and Key Lessons

BY TIO Staff

|január 19, 2023

You want to learn how to become a successful swing trader? Then learning from others’ common swing trading mistakes is the first step.

So you want to try out swing trading. And you think that investing in tons of tools and watching the market on multiple computer screens with a hawk-like glare will do the trick… Until your eyes start to go dry and red because you forget to blink, and your trading charts resemble an underground spy operation that not even James Bond can decipher.

Overwhelming yourself with information in the efforts to not miss out on anything is one of many trading mistakes that can do more harm than good to your trading portfolio.

Knowing what to include and what to avoid is key in creating a plan and strategy for swing trading. Below we’ve listed some common swing trading mistakes that even the best traders sometimes fall victim to. While making mistakes is inevitable, we want to make sure you’re learning from them and not wasting time or money blindly imitating the actions of others. So, we’ve included some key lessons that could help you shape your swing trading strategy.

We also want to point out that there’s an important distinction between “mistakes” and “failed strategies”. A failed strategy is something that fails for you, but may work for someone else. In this article, we’ll give you some common swing trading mistakes as well as what you can learn by failing in order to put you on the road to a better trading outcome.

15 Common Swing Trading Mistakes

  1. Watching The Market Like A Hawk
  2. Letting news, events and fundamentals steer you off your plan
  3. Forgetting To Backtest
  4. Not Practicing Discipline
  5. Being Impatient
  6. Thoughtless Small Moves
  7. Forgetting To Manage Risk
  8. Focusing On Predicting Tops And Bottoms
  9. Thinking You Can Find A 100% Accurate Trade
  10. Too Many Tools
  11. Cluttered Charts
  12. Not Knowing The Right Timeframe To Trade
  13. Forgetting Stop-Loss And Take-Profit Orders
  14. Disproportionate Capital Per Trade
  15. Being Swayed By News And Events

But first, let’s briefly talk about what swing trading is and how it differs from other styles of trading.

What is Swing Trading?

Swing trading is a style of trading that involves holding a position for a few days or weeks at most. This differs from day trading and scalping, which involve holding positions for minutes or hours. Swing traders look for trades that could have a big move, either up or down. They then hold the trade until the price has gone in the direction they predicted, at which point they sell it and move on to another prospect.

Advantages of Swing trading

The advantages of swing trading are that it allows you to take advantage of short-term price movements in the market, which can be profitable if done correctly. You can also take advantage of these movements in multiple markets, which can help you to potentially make a lot more money.

What Are The Most Common Swing Trading Mistakes?

Now it’s time to dive into the swing trading mistakes and bad practices that can damage your chances of succeeding as a swing trader.

Swing Trading Mistake #1: Watching The Market Like a Hawk

Keeping your eyes constantly on the computer screen and focusing on every little market movement and action is one of the major swing trading mistakes. Doing this can be detrimental to your psychological well-being as well as your finances.

Out of impulsiveness and worry, you may find yourself engaging in a lot of minor trades which could eat away at your capital. And as a swing trader, that’s not a strategy that will help you build profits.

Swing trading requires that you allow your trades some “breathing space” to give them a chance to work out.

Swing Trading Mistake #2: Letting fundamentals steer you off your plan

Swing traders should stick to their pre-planned course of action and base their choices on the current price at any given time. Your profits are determined by the price movement.

Avoid trading in response to a single incident that has nothing to do with a trade’s fundamentals. The fundamentals of a trade are merely a diversion for the swing trading method. Some swing traders make rash decisions, and they suffer as a result.

Swing Trading Mistake #3: Forgetting To Backtest

Every swing trading strategy has its limitations, and not every trade reacts the same way to a moving average crossover. Every time you are considering a strategy, you need to back test it first for historical validation. It is crucial that you back test your strategies on every trade you want to invest in to see if it has a high probability of working. I repeat: not every strategy will work on every trade!

Swing Trading Mistake #4: Being Impatient

Patience is a virtue that can be difficult to maintain in today’s fast-paced society. We are constantly bombarded with information from all angles and we feel a sense of FOMO that we must stay on top to stay ahead of the game.

As a swing trader, patience is one of the most important traits to have.

It’s not easy to trade, especially in the long-term. You need to be able to wait for your trades to turn in your favor, and that can be difficult if you’re impatient. Even if you’re already making money as a swing trader and have a lot of experience with trading, it’s important not to let impatience get in the way of your chances at success.

If you don’t practice patience, your trading strategy will be negatively affected. The benefits of being patient include: staying focused on the long-term picture, staying within your boundaries and not over-trading, and knowing when to take profits or cut losses quickly so that you don’t go into emotional states where your decisions are based on emotion rather than logic or discipline. Speaking of discipline…

Swing Trading Mistake #5: Not Practicing Discipline

Lack of discipline can affect you negatively as a swing trader in a number of ways.

  • First, you may be tempted to make trades that don’t fit your long-term strategy or risk tolerance.
  • Second, you may find yourself making impulsive decisions about which assets to buy and sell.
  • Finally, you may have trouble sticking with your trading plan when things get rough—which is exactly when you need to stay disciplined!

Swing Trading Mistake #6: Thoughtless Small Moves

One small extra trade won’t hurt right? Or one more? Or one more again? I mean they look enticing and others seem to be jumping on board so it’s a sure win right? Wrong!

Beginner traders are often tempted to trade every small fluctuation and movement in the market without considering the big picture and their long term trading plan.

A skilled trader should not initiate a trade when the position is weak. To raise the chances of your trade turning profitable only open a trade when the odds are in your favor. Only engage in trading when a clear trend presents itself. If you don’t see a trend then don’t get sucked into FOMO. Just be a spectator and watch what happens.

Rule of thumb: when in doubt stay out.

Swing Trading Mistake #7: Forgetting To Manage Risk

A profit-driven approach without risk management is a swing trading mistake that will burn your capital fast! Although it may seem paradoxical, swing trading is more about risk management than it is about profits. If you allow greed to overpower your decisions and you do not prioritize risk management, you will lose control sooner rather than later.

If you concentrate on improving as a swing trader and managing risk properly, you have a better chance of profiting. Most traders ignore this simple fact because they are so focused on increasing their profits that they become blind to it.

Manage risk effectively by knowing when to step out, cutting your losses, and filter out losing trades.

Swing Trading Mistake #8: Focusing On Predicting Tops And Bottoms

Trying to determine market tops and bottoms is another swing trading mistake that many traders make.

Forget what you think you know regarding predicting when a trade will top out or bottom down. Certainly being able to predict the top or bottom of a trade can turn out to be very rewarding, but it also comes with risks. Remember, risk management is key in swing trading!

Nobody can predict with certainty when a trade’s price will move the other direction. So, hang up the phone on 1800-trading-psychics and give this a try instead:

Your goal while swing trading should always be to aim for moderate profits. Although this might not sound like a lot, this strategy can sum up remarkable returns when carried out regularly.

Swing Trading Mistake #9: Thinking You Can Find A 100% Fail-Proof Strategy

It’s easy to think that if you could just find the perfect trading strategy, you’d be set for life. What you need to realize is that there’s no such thing as a fail-proof trading system or strategy.

Not all trading strategies work for everyone, and that’s okay! If you’re looking for a fail-proof way to trade, you’re going to be disappointed. There is no fail-proof system, tool or strategy and if there were, someone would have already cleaned up with it.

The only way to know what works best for you is to test things out and see how they perform under real market conditions. And, the only strategy that has a chance of working is one that is aligned with your trading personality and goals.

Trading involves losses; you must confront them head-on and resist letting them control you or keep you from moving forward. Learn from your losses and adjust accordingly.

Lather, rinse, repeat.

Speaking of systems and tools…

Swing Trading Mistake #10: Too Many Tools

When you’re swing trading, it’s easy to get overwhelmed by all the different tools available. There are so many things you can use to help you make your trading decisions, but it’s important to remember that using too many tools could lead to deceptive results and leave you feeling like you’re just spinning plates over your head like a street performer.

Instead of taking on too much, try picking two or three tools and sticking with them for a while. Once you have a good feel for how those work in different market conditions, then you can start experimenting with other tools and strategies.

Swing Trading Mistake #11: Cluttered Charts

Similar to using too many tools, if your computer screen and charts start to resemble the computer room in Batman’s cave (minus the butler…unless you’re a very successful trader) then it’s time for a bit of spring cleaning.

Having clean charts helps with clear thinking. To avoid feeling overwhelmed or confused, only use the signals and tools that are absolutely necessary. This does not imply that you should stop using certain important tools like stop-loss and take-profit orders.

Speaking of which…

Swing Trading Mistake #12: Forgetting Stop-Loss And Take-Profit Orders

When you’re swing trading, it’s important to set stop-loss and take-profit orders. If you don’t, you could end up losing a lot of or all your money ‒ an event as desirable as a zombie apocalypse!

Swing trading works on a risk-reward ratio: the greater your risk, the greater your reward. But that doesn’t mean throwing all caution to the wind. Protecting your assets, capital and portfolio should be your first priority over growing them. You must use strict stop loss and take profit orders to avoid losing money.

Swing Trading Mistake #13: Not Trading The Right Time Frames

The way swing traders work is that they look for price movements over a specific time frame and trade to capitalize on those trends.

Since one minute, five minutes, and fifteen minute time frames are too short for any trend to develop and are therefore best suited to day traders, analyzing smaller time frame candlesticks such as these will not produce the intended results.

Swing traders should typically start by using daily charts to detect major trends before moving on to other time frames to confirm that their initial trend identification was accurate.

Swing Trading Mistake #14: Disproportionate Capital Per Trade

The biggest swing trading mistake you can make is allocating too much capital per trade (AKA: putting all your eggs in one basket).

It is up to each trader to decide how much capital to spend on each trade, although excessive capital allocation on one trade should be avoided. Traders should spread their capital out wisely among trades rather than putting all their eggs in one basket because a sizable amount of the overall capital will be lost if this particular trade fails to go as planned and hits the stop loss.

Swing Trading Mistake #15: Being Swayed By News And Events

One of the most common swing trading mistakes is deciding on a trade based on news and events that are happening currently.

It’s easy to let current happenings sway your decision-making process, but this can lead to swings in your trades that will cause you to lose money. Swing traders should stick to their pre-planned course of action and avoid making unneeded adjustments to their trade setup in response to market news and happenings.

Swing Trading FAQs:

We know how you love to ask questions, so we’ve prepared a list of frequently asked questions and answers about swing trading, mistakes and lessons learned to give you that extra ‘umph’ to your potential swing trading ‘triumph’.

FAQ #1: Why do most swing traders fail?

We’ve all been there: you open up a new account, read a few educational articles, and then start trading. You’re excited to get started, but then you end up losing money due to your inexperience.

Why does this happen? 90% of swing traders fail to turn a profit due to not taking this trading journey too seriously. They try to jump right in after opening an account and reading a few articles. Swing trading education is a continuous process that should never end; it’s something that requires dedication and discipline if you want to be successful.

That’s why you could start with a demo account or go live with a small deposit, as little as $10. This way you can start small and learn from your mistakes.

FAQ #2: What are the disadvantages of swing trading?

The exposure to overnight and weekend price gaps is one of swing trading’s drawbacks. Swing trading involves leaving trades open through the night and occasionally into the weekend. These gaps are problematic since they invalidate a trader’s stop loss. Trading lower trade sizes without leverage is the only approach to reduce the risks related to price gaps.

Another disadvantage is that it’s quite challenging to time market swings. Also when swing trading it’s possible to miss out on great trades because you’re not always in front of the computer screen like day traders.

The expense of swing trading can quickly mount up. Even though swing trading is less expensive than day trading, it can still end up costing a lot of money, especially when compared to long-term investing, where one trade might last for several months or even years.

FAQ #3: Which time frame is best for swing trading?

Typically, the weekly, daily, 4-hour, and 1-hour charts are the time frames you want to employ for swing trading. Since trading on time frames below one hour demands a significantly more “hands on” approach in terms of trade management, they are probably of no use to swing traders.

FAQ #4: How long should you hold a swing trade?

The length of time you should hold a swing trade depends on your strategy. Swing trading generally involves maintaining a long or short position for more than one trading session, although typically not for more than a few weeks or a few months. This is just a basic time range; even though some deals may extend for several months or more, the trader may still classify them as swing trades.

FAQ #5: Is swing trading easier than scalping?

Swing trading is usually thought to be better for newbie traders than scalping or day trading, since swing trading demands less trading knowledge and skill.

What is the best strategy for swing trading?

FAQ #6: Is swing trading more profitable than scalping?

As a swing trader you could make considerably more money from each trade than a scalper. However, as a swing trader you’ll need to have patience because, in some situations, you might not see that money for a few weeks. Scalpers, on the other hand, have extremely little profit margins on each deal since this approach involves profiting on small price changes over a few minutes. This means scalpers will see their profits faster compared to swing traders who need to wait weeks or even months.

Trading Mistakes Takeaways

So what have we learned today from these common swing trading mistakes?

Lesson 1: Take frequent breaks and don’t obsess over the market with a hawk-like glare!

Lesson 2: Don’t let a trade’s fundamentals steer you off your plan.

Lesson 3: Remember to back test every strategy on every trade. Not every trade will respond the same to your strategy.

Lesson4: Be patient while waiting for your trades to turn in your favor and stay focused on the long-term picture.

Lesson 5: Practice discipline when things get rough.

Lesson 6: Don’t get distracted and start spreading your capital on small trades that are not part of your plan or strategy.

Lesson 7: Prioritize risk management over profiting.

Lesson 8: Don’t try to be a tops and bottoms psychic. Nobody can predict those with 100% accuracy!

Lesson 9: Trading involves losses. There is no 100% fail-proof strategy. The only way to know what works for you is by testing things out.

Lesson 10: Clean out your ‘tool box’. Start off with 2-3 tools and stick with them for a while before trying other ones.

Lesson 11: A clean chart is a clear mind ready to make focused decisions.

Lesson 12: Buddy up with stop-loss and take-profit orders. Make them your best friends!

Lesson 13: Choose the right time frames to trade. Start by using daily charts.

Lesson 14: Don’t put all your eggs in one basket. Spread your capital wisely across a few trades.

Lesson 15: Stick to your pre-planned course of action and don’t be swayed by news and events.

Ready to Start Swing Trading?

If you liked this article and found it useful let us know in the comments below.

Now that you’ve learned all about swing trading mistakes and the key takeaways, are you ready to start trading?

If you want to start swing trading but are not ready to put money into it, try out TIOmarkets risk-free demo account, play around with strategies and trades until you are comfortable to start with a live account.

If you’re ready to start trading with a live account, our $10 minimum makes it easy for you to test the market with only a small amount.

Remember, knowledge is power. The more you study up and learn about the different markets, commodities, and strategies the more equipped you will be to start growing your portfolio and tapping into potential profits.

Trade safely and reach out to our 24/7 customer support team with any questions.

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TIO Staff

Behind every blog post lies the combined experience of the people working at TIOmarkets. We are a team of dedicated industry professionals and financial markets enthusiasts committed to providing you with trading education and financial markets commentary. Our goal is to help empower you with the knowledge you need to trade in the markets effectively.

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