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Swing Trading vs. Day Trading: Differences, Similarities, Pros and Cons

By Adam Lemon

Adam Lemon began his role at DailyForex in 2013 when he was brought in as an in-house Chief Analyst. Adam trades Forex, stocks and other instruments in his own account. Adam believes that it is very possible for retail traders/investors to secure a positive return over time provided they limit their risks, follow trends, and persevere through short-term losing streaks – provided only reputable brokerages are used. He has previously worked within financial markets over a 12-year period, including 6 years with Merrill Lynch.

Day trading and swing trading rank among the most popular strategies, catering to vastly different trading personalities. I will cover the similarities and differences between day trading and swing trading to help undecided traders understand both trading strategies and decide which suits their trading style better.

Each strategy has different requirements. Discover the pros and cons of day trading vs. swing trading so you can find the best day trading brokers to ensure a competitive edge.

What is Day Trading? 

The best day trading brokers will support day and swing trading, as the former has more demanding requirements. Before traders decide between day trading and swing trading, they must know the core principles of each strategy.

Day trading is a high-stress strategy, in which traders place dozens, if not hundreds, of trades daily. They rely primarily on technical analysis for their order entries but consider fundamental analysis for a big-picture view. This way the trader can know when a potential short-term, disruptive market event unfolds.

Day trading strategies rely on making smaller profits in short timeframes, while aiming to keep losses within an acceptable amount. Yet, they are not as aggressive as scalping.

Day trading requires leverage and, ideally, algorithmic trading solutions, and day traders never hold overnight positions.

Pros & Cons of Day Trading 

The best day trading brokers maintain the necessary infrastructure for day traders to thrive.

The Pros of Day Trading 

  • Flexible, independent trading strategy
  • A fast-paced approach that is a lifestyle as much as a strategy
  • Automated trading primarily based on technical analysis
  • Short-term trading with increased profit potential
  • High-leverage trading
  • No overnight positions
  • Adapts fast to market changes
  • High-volume trading with volume-based discounts by the best day trading brokers

The Cons of Day Trading 

  • High-stress trading, unsuitable for most traders
  • Full-time schedule
  • Higher capital requirement
  • Many brokers lack a competitive trading environment for day traders
  • Increased technological requirements, including automated trading software

What is Swing Trading? 

Day trading vs. swing trading is a core decision traders must make, but what is swing trading? Swing trading is a medium-term strategy that requires less demanding criteria than day trading, as it aims to capture price swings that develop over several days or weeks. Traders use longer timeframes to determine their entry and exit levels, placing far fewer trades with increased profit and loss potential. It is better suited for most traders since they can swing trade part-time. The best swing trading brokers will offer a low cost platform offering an extensive range of technical charting tools.

Swing Trading – Pros & Cons 

Before making the day trading vs. swing trading decision, traders must consider the pros and cons of swing trading.

The pros of swing trading include the following:

  • Lower-stress trading strategy
  • Smaller capital requirements
  • Most brokers support swing trading
  • More time to plan and react to trades
  • Low-frequency trading
  • Ideal for manual trading

The cons of swing trading include the following:

  • Requires time for trades to develop
  • Magnified losses with fewer opportunities to recover
  • Overnight risks
  • Not ideal for traders who trade for a living
  • Missed counter-trend opportunities
  • Less diversification

Similarities and Differences Between Swing and Day Trading 

Day trading vs. swing trading has some similarities and more differences for traders to consider. The best day trading brokers support both strategies, but most brokers only cater well to swing trading and place day traders at a competitive disadvantage.

The Similarities Between Swing and Day Trading 

  • Both rely primarily on technical analysis
  • Neither is a long-term strategy

The Differences Between Swing and Day Trading 

  • Lower-stress versus high-stress trading
  • Manual trading versus algorithmic trading
  • Lower capital requirements versus higher capital requirements
  • Part-time versus full-time trading
  • Low-frequency trading versus high-frequency trading
  • Overnight and weekend risks versus no overnight and weekend risks
  • Swap rates versus no swap rates
  • Available at most brokers versus limited availability based on trading conditions

Bottom Line – Which is Better Swing, or Day Trading? 

Day trading vs. swing trading are popular strategies, and neither is better or worse than the other. Traders must use the one that matches their personality. Day trading is for professional traders who embrace the lifestyle, can handle stress, make fast decisions, and thrive in a tech-driven full-time trading environment. Swing trading is ideal for most traders, as it is a low-cost, part-time approach that allows traders to keep their day jobs and explore financial markets casually.

FAQs

Can I make a living swing trading?

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Traders can make a living with swing trading so long as they understand how it works and how to execute it properly. Knowing when not to use a swing trading strategy is as important as knowing when to use it.

Why is day trading not worth it?

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Each trader must evaluate if day trading is worth it based on their capabilities. Many traders cannot handle the stress levels and psychological impact of day trading, especially consecutive losses and the high volume of trade placement. Day trading is also more of a full-time profession than swing trading, which traders can execute part-time.

Is swing trading better for beginners?

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While it depends on the beginner, swing trading is less time-consuming, requires a smaller investment from a capital and technological perspective, and carries notably smaller stress levels. Therefore, swing trading is more suitable than day trading for most beginners.

What is the most profitable type of trading?

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The most profitable type of trading is the type that the trader has fully mastered. One strategy may yield excessive returns for one trader but result in heavy losses for another. Earning trading profits depends on the trader’s capabilities and not the strategy.

Is swing trading better than day trading?

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No strategy is better than another, as it depends on traders and their preferences, capabilities, skill sets, knowledge, personality, and objectives. Many trading strategies exist, catering to the various requirements of traders, and all can provide consistent profits if used by the right traders in the right market conditions.

Adam Lemon
About Adam Lemon

Adam Lemon began his role at DailyForex in 2013 when he was brought in as an in-house Chief Analyst. Adam trades Forex, stocks and other instruments in his own account. Adam believes that it is very possible for retail traders/investors to secure a positive return over time provided they limit their risks, follow trends, and persevere through short-term losing streaks – provided only reputable brokerages are used. He has previously worked within financial markets over a 12-year period, including 6 years with Merrill Lynch.

 

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