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.”
- Spot Forex.
- Trading before work.
- Need better (more expensive) technology.
- Internet connection
- 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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