In this article, we're going to talk about day trading vs swing trading which one is more profitable, and which one is right for you.
Day trading is pretty simple you're trading intraday so you're entering and exiting positions within the same day and you're not allowed to hold the position overnight.
Swing trading, on the other hand, you are trading for a longer period of time so you're buying something and you're not selling it the same day you might sell it the next day the next week or even the next month so usually when you're swing trading you're holding something from one day up to a month or even two but most often it'll be a week or two that you're holding a position.
Now that we know what swing trading is and what day trading is let's actually put them head-to-head and see which one is better for you to do as a trader.
Let’s compare some factors let's put up day trading on this side and swing trading on this side and let's look at them in terms of the top which one requires less and which one requires more this one is pretty easy right.
If you're day trading it's going to require way more time so day trading more time. You know if you're day trading stocks there's six hours and a half each day plus checking the news in the morning afternoon and you have nine hours that you have to be in front of your computer each day that's a lot of time.
You can look at you know your scanner at night afterward send your orders when you get executed you know you manage your positions every now and then doesn't require too much time 5 to 10 hours a week.
Swing trading doesn't require a lot of time the second factor we want to look at is which one is harder you can guess day trading is going to be harder than swing trading why because day trading is more short-term and when something is more short-term there's a lot more that goes into it.
You have more fees there's more slippage you have to be quicker more competitive there's a lot of things right when your swing trading and you're buying something and you're holding it for a few weeks you have way more time to make decisions and all of the other stuff that goes into the trading.
Day trading is going to be harder than swing trading and obviously if you're doing something even more short-term but you're scalping or you're doing market-making or you're doing high-frequency trading it's harder and harder and harder the shorter timeframe.
You go the harder it becomes to generate profit now the third and most important factor that we're going to look at is profit which one has the potential to make you more profits in day trading vs swing trading which one would you think like the potential for more profits.
Now you've guessed it right one of them requires more time and one of them is harder that's the one that has the potential to make a product which is day trading and this is why even though on the other factors it's not appealing. It’s still appealing to some people because of the potential to make such profits you got to see it this way. When your swing trading you're trying to make a dollar in one or two weeks when you're day trading you're trying to make a quarter but multiple times sorry making fewer profits but you're doing it over and over and over again.
If you're doing high-frequency trading and you know some firms do this I don't recommend anybody does this unless they're part of a huge firm if you look at the average profit for high-frequency trading firms it's 0.01 cents.
Imagine how many trades did make millions of trades ok millions just to make a decent amount of cash right so you have to understand that shorter-term. They’re making smaller profits but you can make it so much more often that in the end, your end result is bigger.
Looking at all these factors which type of trading should you do should you look at the factor that's most important to you and make a decision based on that not necessarily actually not at all that you should do is see which type of trading you have the most interest towards while having the capacity to do.
Let me explain what that means well it means that you have to, first of all, have the interest to do so if you're not interested in day trading then don't day trade. If you're just interested in swing trading then great go-ahead for that now.
If you're interested in day trading meaning you really want to date trade it's something you aspire to do you think about it all the time well good then you have to think about the capacity do you have the capacity to day trade.
Do you have the time and the energy to do all this work?
Because you will have to sit in front of the computer every day and put in work if you don't have the capacity to do it then don't do it. you're not going to do it correctly and in the end, you're not going to make any money you're actually going to lose money.
It’s not because day trading has the potential to make you more money or more profit then you should go for it if you don't have the capacity to do it correctly because you're not going to do it correctly and in the end what's gonna happen is you're gonna lose money.
In this situation, it would have been better for you to swing trade even though. There’s less potential of return but at least you're going to do it correctly and you're going to achieve those returns instead of losing you know what if you don't even have the capacity to swing trade then maybe you shouldn't swing trade.
You should just invest take a percentage out of your paycheck every single week or month when you get paid and put it in the diversified portfolio or some stocks whatever you want but whatever you decide on doing first of all be interested in doing and then second of all have the capacity to do it correctly because we cannot do it correctly then you shouldn't do it at all.
Now real quick all these points that I've talked about only relate to discretionary traders so manual traders if you're an algorithmic trader so if you program computers to treat for you then things are a bit different then it doesn't matter if the strategy you're running is a swing trading strategy or a day trading strategy.
Because the computer is trading for you now when you're programming a computer to trade for you there's a lot of time that you have to spend at the beginning to program the computer but then once the algorithm is running all you have to do is monitor it then you don't spend as much time so these points only relate to manual traders.
This is day trading vs swing trading I hope this helps you make a decision on which type of trading is best for you if you like. So if you like this blog please also share it with your friends and leave a comment below here.
NOTE: This article is not investment advice for anyone because online trading could be a high risk for all who have a lack knowledge & experience. 95% of traders lose money in financial markets. we are not your financial advisors who guarantee your profit at all.