Swing Trading Psychology​ Mastery - Traders Mastermind (2024)

Swing trading is more than a trading style – it‘s a mindset of thinking about the markets.

Like any methodology, a lot goes into a successful swing trader.

Much of it involves having the appropriate swing trading psychology.

Table of Contents

So, why would anyone bother to hold their positions for days or weeks on end? Does the psychology of a swing trader differ from a day trader?

Yes…

Lower time commitment and stress

Due to higher, ‘slower’ time frames, successful swing traders spend much less time on the charts than those who scalp or day trade financial instruments.

It’s common for these traders to commit no more than an hour in total on their trading platform daily.

So, it’s less time-consuming, allowing you to perform other daily tasks.

It alsodrastically reduces stress. Because swing traders execute fewer trades, they don’t have to worry so much about falling intoovertrading.

A plus for your swing trading psychology!

Higher risk to reward potential

The reason to hold a position for several weeks or days is the long price distance or target, equaling a potentially high reward.

A typical swing trader could aim for a 1:5 risk-to-reward ratio.

So, for instance, if you were trading a forex pair, it’s possible to profit from a relatively wide profit target of 250 pips (or higher) with a 50 pip stop (or tighter).

Lower exposure to volatility and illiquid markets

For the most part, swing traders don’t deal with the more volatile conditions in shorter time frames.

Trading during these times can be stressful. As mentioned earlier, swing traders face less stress.

Fewer fees paid in spreads and commissions

Because the frequency of swing trades is not high, swing traders pay less in trading costs.

Wider stops lead to longer-lasting positions

Many swing trading strategies focus on wider stop loss orders to withstand price fluctuations for longer.

Swing trading psychology revolves around the decision-making processes swing traders experience and how they deal with managing emotions.

Other elements of psychology include maintaining discipline, self-control, and cognitive biases.

Patience is arguably the most essential trait for long term success in any traded market.

It’s more prevalent with swing trading strategies due to the lower frequency of positions. The average swing trader shouldn’t expect more than ten trades in a month. (but of course that depends on the individual)

The natural human instinct of instant gratification makes it challenging to achieve this…. we all want more action and trades!

However, the key is understanding that any financial instrument, whether forex or the stock market, can take days or weeks to move a meaningful amount.

This is why successful swing traders look at higher time frames that condense hundreds of hours of price action into a few candles.

Patience applies to all stages of a trading plan: before you place a trade, managing risk open positions, and knowing the best exit points after a certain period.

Another factor in the mindset is ‘quality over quantity.’

Swing trading is about spending less time while finding the most worthwhile opportunities. These trades should be large enough to sufficiently cover potential losses and leave you as much profit as possible.

That’s why having the greatest risk-to-reward ratio is crucial.

Since the quantity of trades is lower than desired, it’s about making the positions that appear truly count for your bottom line.

Regardless of the trading strategy or trading tools, here are ways to get one up over your swing trading psychology.

Increase your trading capital

It’s a no-brainer that money and trading psychology are intertwined.

Ultimately, every trader’s goal is to be profitable. Yet, the higher your starting capital, the better your overall mindset is. Someone with a six-figure balance could be less likely to trade as often as a trader with four figures.

The idea is that your account balance should make you feel financially strong without needing to ‘force’ your trading strategy on the market.

Granted, increasing your equity is challenging.

However, you can attempt this in two ways…

The first is not to withdraw a large portion of your profits. Grow your account slowly over time, if you can keep compounding then consider it.

Limit your screen time

The benefit of swing trading is that you can have a full-time job or other commitments without missing out on the notable market action.

It’s easy to look at your charts passively.

However, if you spend long enough, you may find something that’s not really there.

As a rule of thumb, traders with success in swing trading generally don’t spend over an hour in total every day.

Your trading plan should dedicate certain portions (whether it’s 5 to 10 minutes each) for when you may check the charts.

In my case, my strategy dictates that I should enter trades a few hours before or during the first two hours of the New York session.

I’ll do my ‘homework’ towards the end of the day. On the following day, I’ll have an idea of what new set-ups could develop.

So, in my perusing stage, I’ll know which markets I should focus on. At other times, I’m away from the charts.

Finally, you should avoid mobile apps. It’s best always to sit down and trade from a desktop or laptop.

Focus on higher time-frames

A little trick (depending on your chart software) is to remove any lower charts, i.e., those below 4HR. While higher time frames are slower, they instill the mentality of patience necessary for successful swing trading.

Managing emotions

Control these ‘Four Horsem*n’ of prominent emotions: fear, greed, hope, and regret.

Read trading psychology books

A must-read trading psychology book is‘Trading in the Zone’ by Mark Douglas.

Another must read isBullet Proof Trader by Steve Ward– Steve was also a guest on ourtraders podcast

Being a swing trader or having a swing trading strategy is not for the faint-hearted.

The biggest challenge is adopting the proper swing trading psychology away from the common human instincts of quick results.

Yet, having the right mindset, coupled with a solid trading plan and risk management tactics, is essential.

You can check out more resources to help your mindset and psychology on ourtrading psychologypage

Also here’s a list of our top trading psychologists.Well worth reading there blogs, books and absorbing all the content.