If you’re familiar with trading, you’ve probably heard of those two terms: day trading and swing trading. These are two different strategies that traders usually group themselves into so in this article, we’ll tell you more about them and see if one is actually better.
Day trading is about making lots of trades in a single day using tools and indicators to accurately follow the price action of the market in the short-term time frame. Usually, day traders do not keep any positions overnight and the goal is to make small profits from each trade. Day trading has a lot of positive sides such as potentially making substantial profits, being your own boss and working in a thrilling environment. Besides, since you can trade online, you can also do it wherever you want provided you have a computer and an internet connection. Who has never dreamt of being in a paradisiac island working on his or her laptop on the beach? Sounds too good to be true? Well, kind of. Day trading also has a lot of cons that you should be aware of before getting too excited. The risk of losses are high especially during the first few months, there are no guarantess of paycheck and the stress it generates can be unmanageable for some people.
Swing trading involves identifying swings in the market over a period of days or weeks. The main difference with day trading is therefore the time frame on which traders operate. Swing trading has many advantages: it is a more passive form of investment as you do not need to be in front to your computer all day long, it is less stressful than day trading, does not require expensive equipment yet can still provide signficant profits. Of course, it also has some downsides. Since swing traders usually keep positions open overnight, they need to pay for an overnight financing fee which can be costly if you keep that position long enough. Besides, swing trading, as with any form of investment, also has risks of considerable losses and you should therefore only invest what you can afford to lose.
Which One Is Best?
Well, if you were waiting at this point for a definitive answer, you might be disappointed. Day trading and swing trading each have their pros and cons and objectively speaking, there is not one strategy that is better or more profitable than the other one. The main point is to identify which one works best for you, your skills, your personality and your goals. Day trading requires a lot of knowledge and is really time consuming. It is a full time job! We believe that it should be reserved for individuals who can control themselves and their emotions as well as focus intensely on the subject matter. Swing trading is less demanding and therefore more appealing to those who want to trade as a side opportunity to make extra cash. Take the time to research which strategy will work better for you before taking the leap of faith. As always, we also strongly recommend you to actually try those two strategies on a demo account.