Whether you are starting in the world of financial trading, or want to prove another trading style: this article is for you. I will compare Swing Trading VS Day Trading, two of the most popular trading styles, to help you choose the better.
Each style has its characteristics, and you will take into account aspects such as your trading experience, knowledge of technical analysis, available time to trade, and some other things.I will explain everything you need to know.
Keep on reading! You will learn the basic concepts of each style, their differences, pros and cons, and more.
Basics Concepts You Should Know First
Understanding the following basic concepts will help you better identify how exactly are different Swing Trading from Day Trading:
- Volatility: is the variation of a trading price over time.
- Technical analysis is the study of trading charts, so you can identify trends or patterns to find selling or buying positions.
- Opening and closing position: an open position implies entering the market when buying a financial asset. Closing a position means terminating the investment in the market by selling the asset.
- Trading strategy: is a plan which contains your trading objectives, amount of capital, financial market to operate, indicators to use, and other aspects which help you to be successful.
- The amount of trades: is the number of transactions over a time. This could be from seconds to months.
- Profitability: this is the earnings you get for selling or buying securities.
What is Day Trading?
Day trading is known for its dynamism. It consists of trading during the same day, and you will need a fast and determined analysis because this strategy takes advantage of the volatility in the price of the securities.
For instance, to have a clear vision of the behavior of the market, you will need experience in applying Technical Analysis.
What is Swing Trading?
This style consists of the analysis charts to understand the price movements in the financial markets, thus finding uptrends and downtrends. Therefore, you can let your position open for days or weeks to maximize your profit if the market moves in your favor.
Differences Between Day Trading and Swing Trading
The following chart describe the main differences between Day Trading VS Swing Trading:
What are the Pros and Cons of Swing Trading vs Day Trading?
The following chart describe the pros and cons of Swing trading vs Day Trading:
Swing Trading vs Day Trading: Which is More Profitable?
It is hard to give an exact answer to which trading style is more profitable. It will depend on many variables such as experience, amount of capital, and strategy.
Nevertheless, some may think a Swing Trader can make more profits because it expects more growth over time, but a Day Trader can add up small profits to make a higher net income. In the end, it will depend on the trader itself.
Which is Better Day Trading or Swing Trading?
The better style of trading is the one that suits your objectives best. Both require a different set of skills to operate. Also, many traders use both to take advantage of the distinct behaviors of each market and security.
At MDC Trading Academy, we are committed to the mission of developing professional traders. For this reason, I invite you to join our Senior Trader Program, in which you will learn the basics until creating your trading strategy: all the tools you need to be a successful trader.
Do Swing Traders Make More Money than Day Traders?
There is no precise answer as to who is making more money between a Swing Trader VS Day Trader. It will depend on the trading strategy, trader experience, amount of capital, and other variables. The reality is that either Swing Traders or Day Traders can make money and be profitable.
If you want to earn extra money or make a living out of trading, you should do some training, practice, and learn to operate the financial markets. You will get as far as you want if you put in the effort and take it seriously.
Is Swing Trader Safer than Day Trading?
Any style of trading or investment involves some risk. You should include risk management tools in your trading strategy to avoid or hedge some losses.
No matter which style you choose, the path of becoming a successful trader involves being professional and responsible in your trading operation.
Is Swing Trader Less Stressful than Day Trading?
Swing Trader can be less stressful than Day Trading. Thus the amount of time to operate it is different. A Day Trader should make quicker decisions and faster analyses to open and close positions.
Nevertheless, any trader must learn about trading psychology to understand their feelings and behavior while operating the financial markets. It will help you be less stressed in any trading style you choose.
How Much Money do you Need to Start Swing Trading or Day Trading?
The amount of money you need to start trading will depend on the next:
- How much money can you use for financial trading? The amount should be one you can afford to lose and will not affect your financial health.
- What is the minimum deposit a broker or trader platform requires? It will depend on each platform; for example, NinjaTrader requires a minimum amount of $400 to open an account for doing Day Trading.
- What is your strategy? The trading strategy is the guide that contains all the essential aspects of your operation: the amount of capital, trading style, and financial market to operate, to mention a few. Be sure to create one that fits your necessities.
- Which trading style will you choose? Day Trading implies opening and closing many positions during the same day. For instance, you will need enough money to pay the commissions for each trade. Swing Trading has a more long-term approach. Thus you make fewer trades but look to make higher profits.