Pros & Cons of Day Trading & Swing Trading

Those who buy stocks and sell them on the same day known as a day trader. A day trader can buy and hold the shares for few minutes or few hours. A day trader does not hold the shares for more than a day. When a trader holds the shares for more than a day then it cannot be called day trading. Whereas a swing trader holds a position for multiple days, a week, a month depends upon the swing trader. 

Now let’s talk about the advantages of being a day trader. Firstly, a day trader has no immediate risk on gaps or earnings, because you’re hundred percent cash by the end of the day. Secondly, you can earn money faster. So if you are a lucky day trader and making a profit on a regular basis then you can also invest your previous day profit into the next trading day. People like quick money and excitement that’s why day trading is most popular among many people. Lots of young traders are more attracted towards day trading. Young traders like more excitement than the elder ones. It’s like wow my profit's going up. Or this really sucks, my profits going down. In my point of view, I do not suggest young traders do day trading because of the lacks of experience. Always remember trading is not good for the beginners.

Many brokers try to involve their trading account holder in day trading proving day trading tips to their account holders. So, if you are able to make the profit from their tips you might become an active day trader. That will also help to fulfil the broker’s purpose. But frankly speaking, daily trading tricks only work for few traders not for all. So before trying to become a day trader, you should always do some research whether it will suit you or not. Because daily trading is not suitable for all.

So if you are not well developed in reading and studying the daily technical charts and you are not a good calculator in calculating support and resistance then my opinion for you to not opt for the day trading and don’t become a day trader.

The market hours just don’t work for everybody when you’re day trading. If you are doing any business and job you might not be able to watch the terminal all the day in the market yours. It will be very difficult for those to track their position all the time.

If you are a swing trader you might think about in terms of short to intermediate term position. So if your stocks dip down you may think that you are not stressed and you don’t need to worry about as the stocks prices will increase in near future. But if you are a day trader then you don’t have that option.

Swing trading and its advantages:

Generally, swing traders look for a minor trend reversal to enter trades in the track of the main trend. For example, a swing trader may follow the technical chart to identify which stock is giving reversal signal for buying. If a stock is in a downtrend and the stock might give an indication in the technical chart that all bad is now over for this stock and the stock is going to bounce back from here. On the opposite side when a stock is in a downtrend and the stock is giving a reversal signal for selling a swing trader sell that stock at that particular point. I will discuss how you can make money using technical chart later on my blogs. I have seen investors are making money in swing trading

•    Swing trading is considerably easier to learn than day trading.

•    You don’t have to spend your time in front of the market screen all the day to track your stocks.

•     Trading transaction cost is much lower than the day trading because of fewer trades placed.

•    Swing trading is also less stressful than the day trading.

•    Swing trading allows you to ride out the trend for maximum profit extraction using trailing stop technique

•    Chances of making profit are much higher if you are swing trader than of the day trading. It let your trades run for more than one day so the chance of increased profit much better.

Swing trading is not for you if you don’t have patience because swing trading can be very time-consuming. You might not have to watch out for your stock the entire day sitting in front of your monitor but still, you need to monitor your trades every day to move stop loss to break even, move trailing stop etc.

Which is better a day trading or swing trading?

For me, I personally prefer swing trading as I have tasted it and got the result. Maybe I will also prefer trading with the swing trading later in my life. I would rather be making 5 to 10% profit per trade than 1% per trade and swing trading provides that opportunity. And if you are thinking, which one is more profitable, swing trader or the day trader? The answer is this, both can be profitable. It is really up to you to decide which one is better for you a day trading or swing trading.

So whichever option you pick, swing trading or day trading is actually irrelevant. Both options will make you money probably, It is up to you how you manage your trading risk, how disciplined you are and how you manage your emotions etc.