Day Trading vs. Swing Trading: Which is Best for YOU?
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Which is better? Day trading or swing trading?
Each has advantages and disadvantages. Here's a comparison chart to help you decide which may be a better fit for you:
DAY TRADING DEFINITION:
In and out during open outcry hours.
Use intraday charts.
SWING TRADING DEFINITION
Hold 2-14 days.
Use daily and weekly charts.
DAY TRADING ADVANTAGES:
No overnight risk.
Overnight you have peace of mind.
Can compound your money faster.
DAY TRADING DISADVANTAGES:
Requires a good attention span.
May need a larger account if trading stocks.
Ask your broker about the pattern day trading rule.
May be more stressful while you’re trading.
Need to be “quick on the draw” and make decisions fast.
Can lose money faster!
Can rack up commission costs faster.
Can’t do it during your “day job.”
Exceptions:
Spot Forex.
Trading before work.
Need better (more expensive) technology.
Computer
Internet connection
Software
Execution platform
SWING TRADING ADVANTAGES:
Can do it whenever it fits into your schedule.
Can take time to analyze the charts and other factors and make decisions in a more relaxed manner.
May be less stressful during the day.
Good attention span not required.
Don’t need the best technology so less expensive overhead cost.
Can profit big from overnight moves.
SWING TRADING DISADVANTAGES:
Potentially make less money in the same amount of time (assuming success).
Trading options can help you compound your money faster.
Exposure to overnight risk.
Overnight you may have trouble relaxing when you’re not watching your positions.
Smart to hedge with options.
May need a larger account because of the larger risk per trade based on the range of daily bars.
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