Day Trading vs Swing Trading-Which Is Better?

The time frame is the key in swing trading. The process of determining what kind of trader you want to be depends a lot on your personality, time commitment, account size and skill level. Five-minute and one-hour price charts are often used by day traders to gain perspective of where prices are moving in the next few hours. Both swing trading and day trading have high potential of returns, however both are two very different paths. You may find that although you initially preferred one method, you may like the other instead.

  • For example, what is an appropriate holding time for positions in swing trading?
  • Essentially, I decide how much I am willing to lose before placing a trade, assuming it may be 50/50 odds I win/lose, ultimately time will tell.

Fast forward 4 weeks, your statement arrives in the mail. First, not all stocks are optionable. To me this is like taking your hands of the steering wheel for a few seconds. For example, in the forex scenario the price needs to move 150 pips to reach your target. One of the first things you will learn from training videos, podcasts and user guides is that you need to pick the right securities.

You learn price action, structure, chart patterns, and how to use various trading indicators.

Should I Be a Day Trader or a Swing Trader?

Heck, trading systems were right more than 50% of the time in getting winning trades! Now, let’s assume your profit target is 20 points (=$1,000) when swing trading the e-mini S&P. Before you give up your job and start swing trading for a living, there are certain disadvantages, including:

A Combined Approach

Since they stay for a longer period of time in any given trade, they are free from the risks inherent in daily price volatility and instead capitalize on larger stretches of price movement in their favor. Drop files to upload, don’t blindly trade all touches of support and resistance. I’m doing swing trading because I have a job and I can’t always be at a computer. Avoid basing the decision of how much you should put on your account on broker offerings. See our strategies page to have the details of formulating a trading plan explained. Here we also discuss the top difference between Day trading vs Swing trading along with its infographics and comparison table.

Swing traders focus on daily price trends and patterns rather than by the minute and usually check positions in the morning and before the market closes. One final day difference in swing trading vs scalping and day trading is the use of stop-loss strategies. 3 ways to make money with binary options trading as a beginner. Trading end of day generally also requires a larger account as you will typically be using wider stop losses. My forex broker charges $2.

The Difference Between Day Trading and Swing Trading

Meaning any position held overnight and longer can be considered a swing trade. Swing trading carries an extra risk of holding security overnight or more than a day. Day trading rules, some of the more commonly day-traded financial instruments are stocks, options, currencies, contracts for difference, and a host of futures contracts such as equity index futures, interest rate futures, currency futures and commodity futures. Risk management is key in both swing and day trading and we focus on that so that you learn from past mistakes and don’t wipe out another account. 5% movement in price as a best-case winning trade scenario. This has to do with knowing the traders’ personality. This means that almost everyone can rule out full-time day trading as a realistic possibility. It is estimated that up to 25% of position traders learn to become profitable. Now let’s discuss the major benefit to day trading, when the day is over it’s really over.

Swing traders have a better chance of maintaining their percentage returns even as their account grows, up to a certain point. It’s largely a personal choice if you ask me. Did you find it in a forum, after a google search or was it recommended by someone you talked to in a chatroom? One trading style isn't better than the other; they just suit differing needs. This could help you see why your breakouts plan for currency pairs does not work on weekly charts, for example.

This is because there are large violent swings at times, many due to news reports and some not.

5 Questions To Help You Choose

As a day trader, you need to spend a lot more time in front of you computer waiting for setups and therefore it is really time consuming and if you have a full time job, day trading will not work for you. There are some small similarities between the two: Are you patient or get bored easily; are you a good decision maker or does it take time for you to decide; are you emotionally stable or do you revenge trade easily; can you maintain a high level of focus for a long period of time or do you get distracted easily? If a trader can check on their positions for a few hours a week, they can be a successful swing trader. Listen up...., bitwise classifies the 10 exchanges as real volume exchanges or reference exchanges. Swing trading stocks could be more common practice as it takes more capital and larger risk/reward parameters to trade the security. This is especially true of small accounts. What are the best bitcoin trading platforms?, 7 million BCH. He monitors the markets after the close and before the open and doesn’t watch the markets at all during the day. Each contract requires that you have $5225 (more with some brokers, this figure is from the NinjaTrader Brokerage) in margin.


Unfortunately, margin trading can amplify gains as well as losses. How to make 500 dollars fast: 25 proven methods, if you have a spare house, even better. The short-term nature of the losses and profits also means the income from day trading is taxed at a less advantageous rate than long-term investing. Technical analysis is invaluable in this estimate, as it leverages multiple stock market charts and indicators to identify the stock's price support among investors, while identifying any resistance to upward price performance through the analysis of stock price ranges and trading trends. Best online trading platforms for day trading, so how do you get around that? If you can't day trade during those hours, then choose swing trading as a better option. Although the goal of both these methods of trading is the same, the approach is a bit different.

Depending upon the specific financial asset being traded, certain strategies may be more advantageous than others. The lifespan of a swing trade can range anywhere from two days to two weeks. The green arrow on the chart is where he bought, and the red arrows are where he sold.


Investors who are seeking to establish a viable "nest egg" for their retirement years will most likely explore various position trading options rather than swing trading. The method of trading cannot protect your capital from bad trading decisions or unlucky market swings. Multiple trades per day also equals higher business costs and if you include slippage on your trades, you can see how day trading can be expensive. As with all things in life, both swing and day trading have their pros and cons, and the pros of one method to an individual trader may be cons to another trader. Day trading also requires being present and knowing what happens in the market. Trading strategies also tie into the profit and loss levels.

Swing trading is what we do here at Hit & Run Candlesticks. Before you initiate a trade, you should be very aware of which specific trading strategy you plan on using with that particular asset. While the margin required to trade a 1 lot on ES futures is $400. With the golden cross, a short-term moving average crosses the level of a long-term moving average. It all hinges on your commission structure.

How Much Money Can I Make Swing Trading Forex with $5,000

Ask yourself how much you are willing to risk, what your risk appetite is, and if you can handle the day-to-day stress of trading. I would run to my kitchen to make a sandwich and come back to see all my profits had evaporated. With swing trading, you have a little more time to devote to research and plotting out a strong trading plan. He makes six trades per month and wins 50 percent of those trades. Swing traders are less affected by the second-to-second changes in the price of an asset. Bnn, countering over-confidence. When I am in a position, I am literally in a position. I like to control my risk as much as I can, and therefore I prefer online day trading.

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As a matter of fact, the number 1 mistake forex traders make had nothing to do with trading systems. Traders will need to nurture their trades and constantly adjust their positions overnight. (30 market open) gap up/gap down lists. Well, in the trading world, it is important to figure out what type of trader you want to be.