If you’re new to the investment market, you’ve probably heard the community talk about the term “top swing”. So what is “swinging” really talking about? Let Thuthuatphanmem.vn explain in the article below.
1. What is a peak swing?
Peak swing is the term used when investors buy stocks/coins at a time when the price is going up, in the hope that the price will continue to go higher for a profit. But right after that, the stock price started falling and showed no sign of going up again.
When you look at a stock chart, you see that you bought a stock at a time when the price “peaked” and then plummeted again. This is why we call it “peak swing”.
The concept of “swinging to the top” is the opposite of the definition of “catching the bottom”. “Bottom-catching” means when an investor buys a stock when the price has fallen to a low level. They argue that the price drop is temporary, this is a ripe investment opportunity. And as expected, the stock price has risen again and the profit belongs to investors.
Of course, it is not always wrong to “swing the top” and “catching the bottom” is right. When you have the right strategy, you will successfully swing to the top as the stock price continues to climb. On the other hand, if you catch the bottom but don’t catch it, the stock price continues to plummet, then you will lose.
Peak swings often come from a careless mentality when trading stocks, coins, real estate, etc. You need to be fully equipped with investment knowledge, thoroughly research the market and make reasonable choices. mind.
2. Common mistakes when investing in securities
2.1 Apply excessive leverage
One of the common reasons traders fail is due to excessive leverage. This is both beneficial and extremely harmful. If the result of the transaction is successful, the investor will get a significant profit. But in the case of “swinging to the top”, you will suffer terrible losses.
Furthermore, cryptocurrencies are extremely volatile and unpredictable. Therefore, you should not use leverage beyond your ability to trade coins. If you are a newbie, care about preserving your capital and aim for small and steady wins.
2.2 Poor risk management
Risk management strategies must be well prepared to deal with losses. There are many exchanges today that support stop-loss orders to reduce trading losses. Stop loss is a plan to sell stocks that are falling in price to immediately recover capital and avoid further losses. This is the plan that you can refer to to ensure your investment fund.
2.3 Executing large trades at high risk
New traders often fall into the “all-or-nothing” trap, pouring a lot of their finances into a single trade. This is not even considered a “gamble” because you are not only reckless but also logically wrong.
A trade worth 10% is considered very risky for most investors. For example, you have $1000, you spend 10% ($100) to trade. If you take a risk, you will lose $100 and can only make 9 more trades before you run out of money. It would be wiser to trade at 1% and below instead. This way, you both learn the market and take losses without going bankrupt.
2.4 Lack of care
Psychology and emotions have a big influence on how traders trade. Investing without research thoroughly, listening to other people’s introduction, wanting to remove the gauze quickly… are common reasons leading to “swinging”.
Moreover, when starting to lose, staying calm to turn the situation around is a big challenge for you. In this situation, sometimes the best trade is to trade nothing at all.
Traders often fall into the “top swing” situation when investing is not serious enough. The reasons can stem from inexperience, get-rich-quick mentality, and superficial market access. Successful investors must take responsibility for their actions. Every transaction needs to be well planned and thoughtful.
Above, Thuthuatphanmem.vn has explained to you the definition of “top swing”. Thanks for watching!