Is swing trading more profitable than long-term investment?
Look at the image below. Let me give you a small example. This is the real chart of the State Bank of India.
I have coded swing trader in black and long-term investor in blue for your easy understanding.
In the first scenario, both the swing trader and the long-term investor bought SBI at the same level.
After a month the swing trader sold his holdings and made 60% on his capital of 1 lakh. Now he has 1 lakh 60 thousand. But the long-term investor didn’t sell.
Again the prices of the stock went down and the swing trader got an opportunity to buy in dip. The swing trader sold his positions and made 36% this time. Now he has (1 lakh 60 thousand) + 36% that is 2 lakh 17 thousand.
This time the long-term investor sold his holdings and made 64% total. He has now 1 lakh 64 thousand.
Everybody trades the swings. Nobody buys in dip and sells in the dip. That is just foolishness. Some people trade the larger time frames and some people smaller time frames.
I have coded swing trader in black and long-term investor in blue for your easy understanding.
In the first scenario, both the swing trader and the long-term investor bought SBI at the same level.
After a month the swing trader sold his holdings and made 60% on his capital of 1 lakh. Now he has 1 lakh 60 thousand. But the long-term investor didn’t sell.
Again the prices of the stock went down and the swing trader got an opportunity to buy in dip. The swing trader sold his positions and made 36% this time. Now he has (1 lakh 60 thousand) + 36% that is 2 lakh 17 thousand.
This time the long-term investor sold his holdings and made 64% total. He has now 1 lakh 64 thousand.
Everybody trades the swings. Nobody buys in dip and sells in the dip. That is just foolishness. Some people trade the larger time frames and some people smaller time frames.