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Day Trading vs Swing Trading

, May 11, 2013, 0 Comments

There is a difference between Day Trading and Swing Trading.

Though it might sound simple and self-explanatory at first, many people can’t differentiate between Day Trading and Swing Trading.

In this short, yet informative post, we will outline the difference between Day Trading and Swing Trading.

Day Trading:

  • Day Traders never hold their positions overnight. They flatten all their positions, irrespective of Profit or Loss, before the markets close. Same Day. Everyday.
  • Day Traders don’t give more weight-age about fundamentals or any other important macro data for that matter. Their sole purpose in life is to profit from intraday price swings and volatility in the stock market. If the markets are flat, Day Traders don’t make money; unless they’re Day Trading Options. The bottom line is, you better prepare a Living Will if you ever chose to Day Trade Options, cause it seems much simpler while explaining but really difficult while executing.

Swing Trading:

  • Swing Traders hold their positions overnight or 1+ day. So if you buy on Monday and sell on Tuesday, you are Swing Trading. There is no set holding period for Swing Trades. Traders hold their positions anywhere from a few days to couple weeks/months.
  • Swing Traders do care about fundamentals and macro data. Swing Traders are more analytical, they are meticulous in their approach, and their success rate is considerably higher than that of Day Traders.

To conclude, on a long enough timeline, Swing Traders are more successful than Day Traders. Unless you work on the inside, or at a big investment or brokerage firm.

The cold hard truth is: You will never succeed as a Day Trader. Sure, you’ll have your moments, but the joy will be short lived, as once you get caught in the High Frequency Trading (HFT) trap, you will start questioning your existence.