Day Trading vs. Swing Trading: Which is Best for YOU?

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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.”
  • Exceptions:
    • Spot Forex.
    • Trading before work.
• Need better (more expensive) technology.
  • Computer
  • Internet connection
  • Software
  • 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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