Swing trading Vs Day Trading:
Which Is The Best?
There is a lot of discussion around swing trading vs day trading that leaves people in limbo.
Which is best?
Which should I choose?
What on earth is the difference?
Well, in this article we will decode the two trading strategies.
Then, after reading this article, you will be able to discover which trading style is best suited for you:
Day Trading or Swing Trading…
Check it out:
Use the jump links above to go to each section easily.
What is Swing trading Vs Day Trading
If you are looking to be more of an active trader – someone who works with a shorter-timeframe – then you will most commonly come across two types of trades:
- Swing trader;
- Day traders.
Both traders want to profit from the markets from smaller movements.
The key difference here is that swing traders look to take chunks out of market moves.
They identify when the markets will reverse, and this “swing” to another direction. It is these trades that they try to trade to gain a predictable risk to reward.
Swing traders do not rely on time to dictate how long they should be in a trade for.
This is why swing traders can have positions open for days, weeks and even months.
However, most commonly the shorter the time frame finding a swing trade, the shorter the time you will be in a trade for.
For example, if you find a swing trade in a 5-minute chart, it is most likely you will be in that trade for less than a day.
What attracts people to swing trading is that it is a “slower” form of trading, that can still be executed every day.
On top of that, you do not have to sit in front of the computer all day.
Day trading includes making several of trades in a day.
Most people look at day trading is a primary choice because it looks more exciting, you are surfing in and out of the markets, and small little trades can add up to big overall trades.
Across several assets, you could have made 10 trades throughout the day.
7 out of the 10 trades made a profit.
If you targeted only 20 pips each trade that would equal 140 pips in one trading day.
As you can see, for most this would be enticing because you can take small bites out of the market but walk away with good profits.
Compared with swing trades you may get 100+ pip trades over a few days.
However, day trading is not as easy as the example above.
Difference Between Swing Trade and Day Trade
A swing trade runs from a few days to weeks. A day trade runs from a few minutes to a few hours but closed by the end of the day.
Both the swing trading and day trading have their strengths and weaknesses.
Ultimately, you should go for an approach that works for you.
There is no cookie-cutter route to trading.
What do we mean by working for you?
If you don’t like making quick decisions, then day trading may not be for you.
Equally, if you don’t like waiting around – then swing trading may not be for you.
With swing trade vs. day trade, there are an array of key differences:
Day trading is meant for individuals who are incredibly passionate about the markets.
It is meant for traders who are self-starters and willingness to watch the markets each day to hunt for trading opportunities.
Day traders utilize price discrepancy to earn profits.
They may land into positions according to technical, quantitative, and fundamental reasons.
They utilize trading securities to make and support a living.
The key difference is that day traders do not hold their positions overnight
On the other hand, swing traders consist of shorting or buying securities.
They hold them from numerous days to weeks.
Swing traders are aware of the fact that it takes a long time for a trade to work.
They don’t plan on making trading a full-time job at all.
Swing Trading Vs Day Trading – Which Is More Profitable?
Here is the short answer:
Swing trading is easier, in comparison to day trading, as you can have wider stop losses and be in trades much longer.
This doesn’t translate into swing trading being more profitable forex traders though.
Equally, day trading is tougher because you are having to read the market hour by hour as well as interpreting new data every day, which can leave many exhausted after a couple of days. Although there are more opportunities to trade during the day, this again does not equal more profit.
As you can see, there is potential for both but you must note:
Neither is more profitable than the other.
This is a style of trading, profitability comes from the strategies and the person in control.
A poor swing trader will easily be outperformed by a good day trader and vice versa.
Don’t fall into the trap of being a certain trading style because it looked easy – it could be the wrong one for you!
Also, do not let a trading strategy dictate to you which style you should choose.
Now here is an idea:
Why not try both together?
Can you do this? Of course!
The key to being a successful trader is being able to adapt or die to any situation.
You can easily transition between the two trading styles with zero impacts on your trading ability.
You must understand that one isn’t superior to the other.
They are both meant and suited for differing conditions.
Day trading carries more potential for profits due to the frequency of the style of trade.
Whereas, swing trading tends to be more accurate as you are using larger timeframes, thus using more accumulated price action to make trading decisions.
Here’s the TL;DR on some of the main focus points around the topic:
Is day trading or swing trading more profitable?
Neither. They are both trade styles that you can use to maximise your trading days. However, each style is based on how much time you want to spend trading. Naturally, traders who day trade will have more opportunities to make a profit, but equally more opportunities to suffer a loss. Whereas swing traders have fewer opportunities in both profit and loss scenarios – but tend to have a higher chance of a trade working in their favour (due to using more data and higher timeframes, avoiding knee-jerk decisions).
Is swing trading considered day trading?
Swing trading can be done during the same time as day trading, this is done on a lower timeframe. As discussed, swing trading is more of a style of trade looking to capture trends that change (hence swing in price). This can happen many times a day naturally.
How much money do you need to be a swing trader?
£10,000 is a safe starting point if you want to trade seriously. This value is irrespective of your trading style, whether it’s day trading, swing trading, scalping, value investing… etc. etc.
Are swing traders successful?
Yes, like all trading styles – there is nothing limiting their success. It is the trader behind the analysis where the failure appears.
Summing It Up – Swing Trading vs Day Trading
It’s easy to get lost in the forex trading world with the different styles of trading, strategies, assets and lingo.
Neither trading styles are superior to each other, they just essentially indicate how you approach the markets.
If you are happy to be by the computer each day, following the prices and news releases – day trading may be for you.
On the other hand, if you want to be more hands-off and away from the computer, whilst still trading frequently – then swing trading may be your thing.
Either way, you still need a trading strategy that fits your style and how you want to trade.