Quote from inandlong:
reg... you know as well as I do that would be extremely poor money management. We shouldn't be in a position where an adverse move will kill us.
The way I look at it, you are not in control when you are swing trading. Everything might look fine on the charts, etc. but all of a sudden you get an analyst downgrade, company pre-announcement of lower earnings expectations, SEC suddenly announcing that the company is under investigation for possible accounting irregularities, you get the idea.
Now if you have the financial capability to buy a couple of thousand shares of 5 - 10 stocks spread out over different sectors, then you might be able to insulate yourself from getting hurt too much in a gap situation. Swing trading in this situation would be feasible in my opinion.
But if all you have is the ability to purchase 500 shares of 3 - 5 stocks and hope to successfully swing trade, you might be in for a disappointment. First, anytime any of these stocks gap against you will cause you relatively extreme pain; secondly, swing trading 500 shares will not enable you to make a decent living.
So even if you are successful at it, doing that kind of size won't put food on the table. And the longer you do it, the more chances of blowing out.
My biggest gains have been from swingtrading. But so have my biggest losses.
After giving this up, I started daytrading and was also consistently losing money. But my losses were a lot smaller than my swing trading losses and it allowed me to learn from my mistakes while still keeping me in the game. After 2 years of daytrading, I feel I have finally turned the corner and am now able to consistenly be profitable.
My point is that if I had continued swing trading, I would have been blown out of the water since I was taking huge losses, losses which my account would ultimately not be able to absorb.
To each his own I guess.
