Day Trading Vs. Swing Trading

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The investment time scale for a day trader is just a few hours, while a swing trader may play the market for a day or several days depending on the market circumstances. What you choose to become from either of the two depends largely on your skills and experience. If you are interested in technical analysis, and wish to make money fast, then day trading will suit you. On the other hand, if you have the ability to predict future movements in the market and change your strategy constantly, then you may have the makings of a good swing trader. Though there are brokerage houses and independent investment advisers to guide you, self-study and research are vital for becoming a successful trader in the market.

Day Trading Vs. Swing Trading: A Detailed Comparison
Day Trading Swing Trading
Day trading activity, which involves buying and selling securities, ends in a single day. Swing trading activity can be carried out over a span of many days.
It is a purely technical call and is done after studying analytical charts perfectly. It is done after studying the trends in the stock markets and strategies are developed accordingly.
Due to the high number of daily trades involved, the associated risk is considerable. It is less risky, in comparison to day trading, and your income depends on how good your strategies are.
Intraday trading is extremely stressful and you are required to keep a keen eye on the market every minute, to get your trades right. This means it is a full-time job. It is less stressful, since it can be done along with your regular full-time job by sparing some time.
It is difficult to learn and very few people are able to work as a professional day trader. It is comparatively easier to learn, and the probability of success in this type of trading is high.
Since they are not bothered by long-term company prospects, this type of trading has reduced risk, as traders don’t hold on to shares for long. Swing traders might have to hold on to their stocks for a longer time which can increase their risk in case of bad market news.
Traders do their business on a small profit margin and have strict stop losses to lock their profits in time. Traders look for high changes in stock prices and sell when they get the best valuations for their securities.
They pay more commission or brokerage because of high number of trades every day. They generally pay much less commission or brokerage as compared to intraday traders because of less number of transactions.
Reaction time is very less. So, sharp reflexes and great presence of mind is required. Reaction time is more and hence deep knowledge of market fundamentals and patience is required.
Day trading is recommended to people with ample experience in the capital markets and a high risk-taking ability. Swing trading can be done by beginners as well as experienced people in the market.

The above table must have given you a fair idea about the differences in trading styles. However, apart from the difference, I would also like to list down some strategies for stock market trading using the above mentioned ways.

  • Technical analysis is important for traders. So, you should learn the basics of these trading types thoroughly from a professional.
  • There is some amount of risk associated with these type of transactions. Ergo, you should not make huge investments at one go.
  • Avoid creating leveraged positions in the market.
  • Strike a perfect balance between fear and greed. Book your profits when you have a fear of a market collapse, and be greedy when the valuations are right.
  • Trade in the market actively to understand it properly and gain quality experience.

With a hope that this comparison assists you in achieving your goal of wealth creation.

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