Curious about what percentage of swing traders make money? Want to learn how much swing traders make on average? In this article, we’re going to address these two questions and evaluate the average swing trading success rate as a whole. Maybe you’ve been on the fence about trying this investment strategy out yourself. If you’ve been searching for a gauge for what you can realistically expect, you’ll have a better idea by the end of this discussion.
When it comes to swing trading, you get what you put in – as with most things. And, this is why many who never make money with swing trading fail: they expect to learn everything in a few days and hit the ground running.
While the principles behind swing trading are simple, consistently executing a winning strategy over the course of a year is not easy. But after we discuss the average swing traders’ success rate, we’ll talk about what you can do to increase your chances of making consistent profits through this style of trading. Before going any further, we want to provide a quick overview of the swing trading strategy itself.
A Quick Overview of Swing Trading
First things first – what is swing trading and how does it work? Our complete guide (linked previously) is a great introductory resource. It teaches you the principles behind swing trading and what this investment strategy is all about. However, here are the basics you need to know for the sake of today’s discussion:
Swing trading is a short-term investment style. Investors seek to capitalize on short-term swings in a stock’s overall price trend. This means while a stock is technically decreasing in value over the course of a month or a year, you can still make money by trading it. The daily or weekly increases and decreases in a stock’s overall price movement present opportunities for investors to get in low, and get out high. While the overall price change may not be much – sometimes less than a few dollars – the volume of capital you trade with can result in impressive profits. Due to the nature of this style, investors are primarily concerned with tracking indicators for swing trading. Fundamental analysis doesn’t hold much weight, as swing traders aren’t concerned with the long-term picture of a stock they’re swing trading.
In comparing swing trading vs day trading, you’ll see that swing traders spend less time in front of their screens – as they enter/exit their positions over the course of a few days, or a week or two at most. On the other hand, when comparing swing trading vs long term investing, you’ll see that swing traders can earn extra income in the present – whereas long-term investors primarily plan for retirement.
This creates an interesting opportunity where swing traders are capable of making profit as a side hustle while still working full time. But, exactly how much do swing traders make? Making money swing trading is entirely possible, but what sort of success rate can you expect? Let’s take a look…
What is the Average Swing Trading Success Rate?
Trying to determine the average swing trading success rate is tricky. Because before we can do that, we have to define what a “success rate” is. Is it just the percentage of trades you earn some amount of profit on? Or, is success measured by a dollar amount you bring in every month through swing trading? In general, success in swing trading is very subjective and fluid. Your definition of success may be different from the next trader’s definition of success. However, we’re going to tell you what our success rate for swing trading is based on: consistent profits over the course of a year.
We recently wrote an article addressing the question – is swing trading profitable? Of course, the answer is yes – it can be. But in that guide, we discussed that a good profit return to expect over the course of a year is between 10-30%. If you earn just 1-2% profit every month, you’ll earn 12-24% annually – which we would consider a very successful year.
This seems so doable…and yet, the truth is that the success rate of most swing traders is pretty low. But as you’ll soon discover, it’s not any fault of the strategy itself. Rather, it’s a misconception about how easy it is to learn and execute a successful swing trading strategy over the course of a year. By simply following the advice we lay out later in this article, you can set yourself up for success. First – let’s address an important question related to this topic. What percentage of swing traders make money?
What Percentage of Swing Traders Make Money & Are “Successful”?
So – success in swing trading (for the purpose of this discussion) is defined by reporting a profit annually. We’re not going to go into the details of the average income of a swing trader – or what dollar amount constitutes success. Because again – monetary goals will undoubtedly vary from person to person. Thus, we’re going to ask a more relevant question in terms of the swing trading success rate: what percentage of swing traders make money in the stock market?
We’ve seen estimations that as many as 90% of swing traders fail to make money in the stock market – meaning they either break even or lose money. That suggests that the average swing trading success rate is somewhere around 10% – meaning 10% of swing traders actually bring in profit over the course of a year. Now – we don’t say this to discourage you. Keep in mind that the vast majority of traders treat it more like gambling. They don’t actually use software to help them make emotionless decisions, they don’t follow sound strategies or principles, and they don’t have the right mindset.
The truth is, the most successful swing traders aren’t doing anything all that revolutionary or groundbreaking. What can you do to be in the 10% of swing traders that earn profit? Here’s our advice…
Is There Anything You Can do to Enjoy a Higher Swing Trading Success Rate?
Seeing a good success rate with swing trading is entirely feasible and actually quite simple. You just need to keep your losses infrequent & small and take profits when you can. With that said, there are a few things you can do to dramatically improve your chances of being among the 10% or so of swing traders who consistently earn profits over the course of a year. While they’re all important, the last tip is one you can’t overlook – so let’s dive in.
Invest in Continued Education
The main reason 90% of swing traders don’t make a profit from their efforts is that they don’t take it seriously enough. They open an account, read a few articles, and try and dive right in. Learning swing trading is an ongoing process that should never stop. The free resources we have here in the VectorVest blog are great, but investing in higher learning is a great way to ensure success with swing trading.
Eliminate Emotion From Your Trading
One of the key characteristics of the most successful swing traders is the ability to trade without emotion. The ability to cut losses and keep them small – rather than holding on and hoping for a rebound – will prevent you from blowing up your portfolio. You need to be able to make unbiased, emotionless decisions in terms of the stocks you choose to trade – and when you enter and exit your position. You should have your entire plan mapped out before entering the position, and you should execute your plan no matter the outcome. This is something you’ll have to learn over the course of time – but, you can speed up the learning curve with VectorVest.
Set Yourself up for Success With the Right Tools
If you only take away one thing from this article, let it be this: set yourself up for success with the right tools for trading. With the right stock picking software, you’ll be able to uncover winning opportunities on autopilot. The VectorVest system simplifies investing by replacing all technical analysis with three easy-to-understand ratings: relative value (RV), relative safety (RT), and relative timing (RT). Together, these make up the overall VST rating a stock is given. With a clear buy, sell, or hold rating for any given stock, you’ll have a better chance of making money as a swing trader with this system in your arsenal. The best part? Our pre-built searches bring up the best stock picks on any given day – and can be tailored to your unique investing style. If you prefer investing while you’re on the go, we even offer mobile stock advisory services in our app.
There are so many factors you can’t control when it comes to how the stock market works – why not do everything in your power to tip the scale in your favor? By eliminating all the emotion and guesswork from investing, you’ll win far more trades. You can see how it works with our free stock analyzer tool.
Parting Thoughts on Swing Trading Success Rates
Don’t let the low average swing trading success rate deter you from getting started. As you now know, the vast majority of swing traders fail to make a profit over the course of a year – but there’s a reason why. And since you now know what it takes to be a successful swing trader, you can avoid the common pitfalls yourself and get started on the right foot.
If we could leave you with a few parting thoughts, it would be these: give yourself ample runway to learn the strategies and principles behind swing trading before opening your account. You can start with paper trading to experience the ups and downs of swing trading without blowing up your cash account. When you do start investing real cash, you should leverage the help of a proven system that consistently outperforms the market – VectorVest.