Day Trading Vs. Swing Trading

The world is evolving; stock trading is becoming the talk of the town. But is it even the same as old school stock trading? Not really, traders have come up with new strategies and much more diversified ways of making money in the stock market. Today, the active traders have somewhat divided themselves into two trading camps - the day traders and the swing traders. But what is the difference between them? Why two different types? Stop! Stop! No more pondering, let us help you take an in - depth understanding into this!

Day Trading is all about using technical analysis and charting systems that allows the traders to make multiple single trades on a day to day basis. On the other side, swing trading involves the art of making trades based on swings in stocks, commodities, and currencies that generally fluctuate over days or weeks. With this being said, both come with their own set of pros and cons; one should go for a strategy that aligns with their skills, preferences, and lifestyle. One can also learn the trading strategies from uae forex brokers Let's talk about this taking in view different aspects!

1. The Trading Frequency

What about the number of times one can trade? Does Swing Trading and Day Trading envelop this aspect? They definitely do! Talking about day trading, day traders work by opening up and closing down multiple positions within a single day whilst this isn't the same case for swing traders. Swing Traders take up on trades that generally last multiple days, weeks, or even months.

2. Number of Transactions

It's few for one while more for others, let's understand which goes for which! It is a known fact how swing trading is evolving day by day; undoubtedly it is a fast - paced form of trading but till date the trades are spread over days, weeks and even months. You know what this translates to? Slow Losses and eventually Slower Gains too. On the other hand, day traders do more transactions as they are looking for rapid compounding of returns.

3. Time Horizons

Swing Trading positions come with long time horizons. What does this mean? This strategy is built along the lines of making trades over a period of time, not rapidly thus takes more time. Whilst, day trading goes for multiple trades daily or every other day to make small profits out of price fluctuations.

4. Time Commitment

Both require concentration, both require time; it just varies due to the trading nature. Day Trading typically takes up more time, usually two to three hours per day as one has to analyses and chart on a daily basis. This case is opposite for swing trading - you may just need 30 minutes to update orders and positions.

With having talked about the basics, there is one important point we would like to enlighten you with. The how to trade aspect, for swing trading you are good to go with just a brokerage account while for day trading one needs up-to-date software. What is your choice then?

Author

George Rossi

George is the Chief Market and Broker Analyst at brokertested.com. Prior to being recruited by brokertested.com, I served SVS Securities as Chief Market Analyst for two years. Earlier, he joined Morgan Stanley in Nov 2013 as Research Analyst.

George is a well-rounded financial services professional experienced in fundamental and technical analysis, global macroeconomic research, foreign exchange and commodity markets and an independent trader.