By Arjun Chandrasekar.
What’s the difference between swing and day trading? Well, day traders have multiple positions which they open and close through the day. Swing traders make trades that last longer times: days, weeks, months, or years. The difference depends on the traders’ suitability, which they prefer and which fits their circumstances. Any one person doesn’t have to be only one of these, there are many day traders, swing traders, and buy-to-hold traders all at once.
The key variables in determining the difference between day and swing trading are potential returns and trading time. Day trading has more potential for profit, based on percentages for small sized trading amounts. But while this can account for huge returns, it also works the opposite way. As easy as it is to make gains, they can also quickly lose all their money. Swing traders are able to maintain their returns while their account grows, bringing in steady income. Although both day and swing trading require lots of time, day trading usually takes much more time and effort. They normally have to prepare and review graphs and charts and trade a minimum of 2 hours a day. Tie this with going to school or having a 9-5 job, and it’s very stressful and a big time commitment for their day. On the other hand, swing traders usually use up less time. Just updating current positions only takes about 30-45 minutes per day, and they don’t even have to do this daily, depending on how their positions are doing. If they’re holding positions that last for weeks and months, they sometimes only need to look at their position stability and graphs once or twice a week.
Another commitment to day trading is waking up before the market opens, and only trading while the market is open and active. Depending on the time zone, it’s a big alteration to their daily lives. For example, during the week day traders living in the PST time zone have to wake up before 6:30, while those living in the EST time zone only have to wake up before 9:30. As opposed to that, swimming traders can place trading orders at any time during the day, even after the market closed.
While day trading has more potential for profits, swing trading usually receives a more stable income. Day trading definitely requires more time and commitment on the daily, while swing trading has its perks that require less time and effort. But in the end, day and swing trading are choices that should be made based on your personal preferences and needs.