Best of the Week
Most Popular
1. Next Financial Crisis Is Already Here! John Lewis 99% Profits CRASH - Retail Sector Collapse - Nadeem_Walayat
2.Why Is Apple Giving This Tiny Stock A $900 Million Opportunity? - James Burgess
3.Gold Price Trend Analysis - - Nadeem_Walayatt
4.The Beginning of the End of the Dollar - Richard_Mills
5.Stock Market Trend Forecast Update - - Nadeem_Walayat
6.Hindenburg Omen & Consumer Confidence: More Signs of Stock Market Trouble in 2019 - Troy_Bombardia
7.Precious Metals Sector: It’s 2013 All Over Again - P_Radomski_CFA
8.Central Banks Have Gone Rogue, Putting Us All at Risk - Ellen_Brown
9.Gold Stocks Forced Capitulation - Zeal_LLC
10.The Post Bubble Market Contraction Thesis Receives Validation - Plunger
Last 7 days
BREXIT, Italy’s Deficit, The EU Summit And Fomcs Minutes In Focus - 16th Oct 18
Is this the Start of a Bear Market for Stocks? - 16th Oct 18
Chinese Economic Prospects Amid US Trade Wars - 16th Oct 18
2019’s Hottest Commodity Is About To Explode - 15th Oct 18
Keep A Proper Perspective About Stock Market Recent Move - 15th Oct 18
Is the Stocks Bull Dead? - 15th Oct 18
Stock Market Bottoms are a Process - 15th Oct 18
Fed is Doing More Than Just Raising Rates - 14th Oct 18
Stock Markets Last Cheap Sector - Gold - 14th Oct 18
Next Points for Crude Oil Bears - 13th Oct 18
Stock Market Crash: Time to Buy Stocks? - 12th Oct 18
Sheffield Best Secondary School Clusters for 2018-19 Place Applications - 12th Oct 18
Trump’s Tariffs Echo US Trade Policy That Led to the Great Depression - 12th Oct 18
US Dollar Engulfing Bearish Pattern Warns Of Dollar Weakness - 12th Oct 18
Stock Market Storm Crash, Dow Plunges to Trend Forecast! - 12th Oct 18
SP500 Stock Market Sell Off Well Forecast by President Trump - 11th Oct 18
USD and US Tr. Yields Retreat, GBP Gains on Brexit-deal Report - 11th Oct 18
Loss Of Yield Curve "Shock Absorber" Could Mean A Rough Ride Ahead For Markets & Housing - 11th Oct 18
Just How Bearish is the Stock Market’s Breadth? - 11th Oct 18
Here’s Why Gold Stocks, Gold, and Silver Are Great Buys Now - 10th Oct 18
Russian Ruble Technical Chart Analysis and Forecast - 10th Oct 18
Society Trends To Keep in Mind in the USA - 10th Oct 18
[eBook] How to Identify Turning Points in the Market - 10th Oct 18
Euro Vulnerable as Slowing Growth Reveals Underlying Issues - 9th Oct 18
Construction Companies to Watch For in 2019 - 9th Oct 18
ECB Meeting Minutes and US Inflation Data in Focus - 9th Oct 18
Interest Rate Shock-Time to Find Out Who has been Swimming Naked - 9th Oct 18
Unintended Consequences of Expanding Sheffield's Best Ranking State Secondary Schools - 9th Oct 18
Crude Oil Price Trend Forecast 2018 Update - 9th Oct 18
Inflation Is Starting To Heat Up - 8th Oct 18
Stock Market Seasonal Influence at Work - 8th Oct 18
Barrick Randgold Deal Breathes New Life into Gold - 8th Oct 18
Stock Market Sell Off, Dollar Rally Expected, Now What? - 8th Oct 18
The Chartology of Gold and Silver - 8th Oct 18
The Income for Life Playbook - 8th Oct 18

Market Oracle FREE Newsletter

Trading Any Market

Day Trading vs Swing Trading: Which One is the Better Strategy?

InvestorEducation / Learn to Trade Dec 06, 2017 - 02:15 PM GMT

By: Boris_Dzhingarov

InvestorEducation

Which is the most appropriate trading strategy to earn a living? Well, that depends. First of all, different markets demand different strategies. That said, it narrows down to your style, personality and circumstances; but it takes more than just that to find a strategy that best suits you.


The development and application of any trading strategy has to follow certain steps. Some of these steps include formulation, optimization and monitoring of the trading performance. Now, trading strategies can either be long-term or short term; and many traders would rather profit from the short-term investments.

Day trading and swing trading are the most popular short-term trading strategies. Many active traders would often group themselves into either of these two camps. However, several finance analysts such as those at Olsson Capital have had to tackle the question of which of these two trading approaches is better. Traders are always asking whether they should day trade or swing trade.

What is day trading?
Day trading refers to the method of buying or selling within the same day. No position is held overnight; all are closed out within the same day they are taken. This kind of trading is more appropriate for professionals; it involves a very unique skill set that can be tough to master.

When trading, day traders often enter and exit a trade in only a matter of minutes. They have to make quick decisions based on sophisticated charting systems and complex analysis. Their goal at the end of the day is to make little profits on numerous trades such as currencies, stocks or commodities.

Clearly, day trading is a very risky trading approach. That is why brokerage firms have to confirm whether clients are well aware of the risks involved, and if they possess the required trading experience.

Swing trading
Swing traders are allowed to sell or buy for more than a day. This approach attempts to capture gains in any financial instrument within a day’s hold to several weeks. Swing traders also use technical analysis to look for stocks that have a short-term price momentum. Besides analyzing the price patterns and trends, the traders may also use the intrinsic or fundamental value of stocks.

Unlike day trading, swing trading assumes a bigger price move and price range and hence needs careful position sizing to minimize losses.

Day trading or swing trading?
Both day trading and swing trading are approaches that seek to make short-term gains on price fluctuations in the trading market. However, the two are also different. Each strategy features the good and bad side. Therefore when deciding between the two, it is worth weighing all sides of both choices. Then, make a decision based on your preferences, skills and lifestyle.

Risks
Day trading definitely has more risks involved. For instance, this methodology can put you in debt very fast. This is because day traders generally use borrowed money, meaning that they put themselves at a higher risk of losing more when the worst happens. The good thing about this approach is that it offers you more control over your trading activity. You become your own boss and can monitor stock trends fully on your own.

On the other hand, swing trading utilizes fewer margins per trade. In fact, you do not have to use it if you do not want to. This in turn minimizes your risk significantly. However, swing traders can suffer substantial losses especially because they get to hold their positions longer than day traders.

Commitment
Day trading will require a lot of your time and effort. During trade, you have to change positions at very small intervals to ensure that you are still in a profitable place. Most day traders operate full time; it is more stressful tackling day trading alongside another occupation. Sometimes even getting a bathroom break is almost impossible.

Swing trading on the other side is less stressful. You have more breathing space and you can even multitask and still get things done. However, you still have to monitor your positions and make sure that you are in a good position.

Performance
With day trading, you get an instant feeling of accomplishment because at the end of each day you can study your general performance by calculating profits as well as losses. However, with swing trading, it takes some time before you can see the results of your efforts. You therefore need patience; you will often go through unknown periods, waiting to see how the stock trends turn out.

By Boris Dzhingarov

© 2017 Copyright Boris Dzhingarov - All Rights Reserved
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2018 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules