Day Trading vs Swing Trading: Which is better?

It can sometimes be hard to understand the world of trade. But starting to understand the basics is key to the start of any financial journey. Today’s blog will briefly touch on the two main ways of trading: day trading and swing trading. To read more be sure to head over to the full SpectroCoin blog post!

What is Day Trading? What is Swing Trading?

If you are starting your journey in trading or perhaps need a refresher on day trading and swing trading, you are in the correct place. First, it is essential to understand day trading and swing trading individually to be able to compare them.

Day trading

Day trading is when you buy and sell stocks within the same day, keeping no positions open overnight. Usually, day trading involves highly volatile assets. Meaning traders look to buy and sell assets with a lot of price movement and high liquidity. Because the assets you trade in day trading can often have quick price movements, it is vital to have a clear and defined strategy before you start trading.

Usually, it is recommended to focus on one asset at a time. This will allow you to track the progress of the asset in more detail. This may involve watching/ reading the news and being aware of any events related to the asset or sector of interest. All these things need to be tracked closely to have a successful day trading experience.

Swing trading

Swing trading is a method of trading where assets are bought and sold not within a matter of a day but rather a matter of days, weeks or even months. Although usually, if an asset is held for more than a year, it would be considered an investment strategy rather than swing trading. This way of trading usually relies on gains over an extended period of time.

The most popular choices for swing trading in terms of assets are assets that have a large capital. These could be stocks with a market capitalization of over $10 billion or in terms of crypto, these would most likely be currencies such as Bitcoin, Ethereum and Tether because they have the largest capital and are of the most actively traded. These assets are suitable for swing traders because they are usually less volatile and have fewer dramatic price jumps.

Difference

First of all, day trading takes much more time than swing trading. Since day trading requires positions to be opened and closed within the day, it is crucial to always be on the lookout for any changes and news that may affect your chosen asset. Additionally, since day trading focuses on volatile assets a lot of the time, it is always important to be online and ready to decide when to buy/sell. On the other hand, the time frame between buying and selling in swing trading can be bigger. This means you can spend less time tracking your position depending on your strategy.

Secondly, a big difference between the two ways of trading is how much work you have to put in and your primary focus. Day traders can avoid gaps in news and updates having to do with their assets. This takes more effort and requires perhaps a faster reaction and decision making. In swing trading, asset prices can fluctuate when the trader is not active, although this fluctuation is usually smaller. But even though the day trading assets tend to be more volatile, it still does not mean that swing traders are safe from quick and sudden shifts in the markets.

Lastly, a big difference in these two ways to trade could be a real deciding factor for which is better for you – the trade profit. If a day trader has a good strategy and excellent trading skills, he is more likely to make a much bigger profit than the swing traders. This is because day trading assets usually have more significant price movements than assets typically chosen for swing trading.

Which is better?

There is no straightforward answer to which of these two trading strategies is better. It all depends on your lifestyle. If, for example, you have a lot of time on your hands and want to make trading your day job, then maybe day trading is a better option for you. Or perhaps you want trading to be more of a hobby, and you do not wish to trade volatile and highly risky assets. In that case, maybe you should choose swing trading.

Either one you choose, there are a few things that are common amongst them. Both involve education, an interest in stocks, markets, politics, etc. Additionally, both require good strategies, logic-based decision making, discipline and learning through practice. Lastly, both require the use of risk management. This may include setting stop-loss and take-profit points,  diversifying and hedging, using the one-per cent rule, etc.

Cryptocurrency exchange for traders is available on SpectroCoin Pro.

We hope this blog post was helpful in understanding Day Trading and Swing Trading. For more blogs be sure to head over to the SpectroCoin blog.

If you have any questions regarding cryptocurrencies supported at SpectroCoin, don’t hesitate to contact our customer support through the LiveChat bubble available on our website or drop an email at [email protected].