Swing trading VS Day Trading: the difference and key points

In Trading by

There are two kinds of active traders, those who prefer swing trading and those who prefer day trading. They have something in common: both sides want to make profits in short terms. The only different thing is the strategy they use. Today we are going to talk about the difference between swing trading and day trading.

Swing Trading

Swing trading is based on the usage of swings in all kinds of assets. Swings have a different duration period. Some last for days, some for weeks. Swing traders cannot make trading a full-time job because of the specifics of their strategy.

In swing trading, you are not supposed to monitor the markets for the whole day. You can check them from time to time. This can be more like a hobby. The positions are usually held at least overnight, traders can use maximum leverage two times the sum invested, and stop-loss orders can be placed. Also, it is not required for a swing trader to have special skills or knowledge. It is even possible to win without superb skills.

As in any trading, there are also risks. You can get high profits and high losses in swing trading. Here the sessions are longer, so you have to be careful with what you do not to miss any opportunities.

Read more on the topic: What is swing trading.

Картинки по запросу "Swing trading VS Day Trading"

Day Trading

Day trading is based on the smallest market movements. It has great potential in bringing profits in short terms. The trades are usually closed during the day. Day traders have to constantly monitor the markets for the smallest moves in order to earn enough for themselves.

Day trading can be both a part-time and full-time job. On the one hand, you can trade whenever the market is open. On the other hand, there are market hours with the highest volume that give you a chance of getting more money per session. 

Read more on the topic: What is Price Action: why it’s important for Swing Trading.

The day trading strategy requires a lot of knowledge and skills. You need to watch several screens at once, act as fast and possible, be totally concentrated on the charts. Only this way good profits can be made. If this is your main job, it should be done every day. Daily practice will help you master your skills.

Although the trades are shorter and usually with lower sums, there also are risks. You need to react quickly to all the changes and complete trades in very short terms. In a market with high volume, even one second of delay can make you lose all your earnings for the session.

What is better?

It is hard to answer the question without knowing what you are looking for. But here are some key takeaways.

If you do not want to spend plenty of time, choose swing trading:

  • Longer trading sessions;
  • No need to be stuck near the monitor for the whole day;
  • The leverage is two times the sum invested;
  • No superb skills are needed.

If you want to have constant profits and trading is your main job or hobby, choose day trading:

  • Short trading sessions;
  • Profits from the smallest market movements;
  • You need to watch the markets carefully;
  • You need to be very skillful.

So, what trading strategy suits you best? Read our other articles with detailed explanations for each topic to find that out for sure!