Day trading vs.Swing trading

Adopting a trading strategy depends on how one wants to invest and get profit. Two types of trading are famous among traders, day trading and swing trading. Both of these differ depending on capital required and the liquidity of markets.

Both of the trading techniques need high concentration and perseverance of the trader.

Down below, we are giving a brief description of day trading and swing trading.

Day trading - It is the most common technique employed by traders in forex and stocks markets. In day trading, a trader uses high leverages and intraday trading strategies to earn a profit on small investments and highly liquid markets.

In a day trading technique, a trader gets perks on small fluctuations in the markets. All the transactions are made on a single day, and at the end of the day, the trader has to close his position. In short, we can say that in day trading the trader has only a single day to make a profit on his capital.

A trader makes a profit from both the upward and the downward swings of the market within a day by playing long and short.

Pros – 

• No worries about overnight market fluctuations.

• Less capital required.

• Useful for the voracious trader as the returns are quite suitable for small investments.

• No need of vast experience and knowledge about the markets.

• Good for beginners.

• A trader need not worry for any bad news and its repercussions on the market.

Cons – 

• Regular vigil is required.

• One cannot hold his position for overnight.

• Whether having loss or profit, one has to close his position on the same day.

• As the profit is good in day trading, likewise the losses are also very big.

• Self-discipline and a clear objective are required.

• One cannot pre-plan his strategy.

• One cannot take the idea from past trends.

• One can’t make money by investing in bonus share, right issue and stock splits.

Swing trading – Swing trading is good for those who do jobs and want to earn more profit besides his regular income. In swing trading, a trader can hold his position overnight and until several days. 

Unlike day trading, swing trading does not require much knowledge to earn profit except technical indicators and charts. 

In swing trading, the time frame allotted to the trader is more compared to day trading, and hence one can get more time to implement strategies and read charts to plan his trades.

Although Market fluctuations may impart significant risks to individual trades, one can easily manage them because of the long time span available to hold the position.

Besides using price trends in commodities and other stocks, a swing trader has to do fundamental analysis. 

Past trends should also be analyzed by technical analysis and indicators.

Pros -  

• One can chalk out strategies for trading.

• Trades are governed by technical analysis in spite of individual sentiments.

• One can change his position according to market sentiments.

• Big profit can be made on numerous trades.

• More liquidity is available as the time span is more.

• One can invest in bonus share, right issues, and stocks split.

• One does not supposed to sit in front of a computer screen all the time.

• One can easily place stop-loss orders according to market sentiments.

Cons - 

• Overnight fluctuations in the market can convert the profit into losses.

• Risks involved is always high.

• This technique requires more patience to attain pre-decide goals.

Conclusion – So in particular we can say that both the trading techniques like day trading and swing trading are good for individual perspective. For those who want to make quick money are good to do day trading. And those who are not afraid of overnight or weekend fluctuation can do swing trading.

In both of the trading techniques, the main difference is the time span. The day trader has less time to make his moves and earn a profit, whereas the swing trader has plenty of time to monitor his trades and implement profit-making strategies.