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Swing vs. Day Trading – Which is Better?

April 29th, 2014

You can compare day traders and swing traders to the Ninja Turtles – always fighting the Foot Clan. They are always battling each other, but which one is better?

Let's break down the differences between day traders and swing traders, so you can decide which style of trading is better for you...

Holding Time

The holding time for a day trader is less than 6.5 hours, because there is less than 6.5 hours in a trading day. You can possibly hold stock for 7 hours if you trade premarket or aftermarket, but typically you'll hold less than 6.5 hours.

The holding time for a swing trader, on the other hand, is anywhere from 2 days to 2 months. It's typically longer than one day.

Overnight Risk

If you're a day trader, you have no overnight risk. You buy and sell your positions within one day, are done by the end of the day, and have your night freedom.

With a swing trader, you will have overnight risk if a stock gaps down which can affect you in trading. You'll have to make adjustments to your trade with swing trading to account for overnight risk.

Commissions

Commissions are typically more expensive for day traders. Because you are making more trades, the commissions will chew you out...

It could amount to 20%-30% of your earnings and will take a larger chunk compared to swing trading because you have to get in and out of those trades every day.

With swing trading, commissions will be less expensive because you are getting in and out of positions less frequently. You'll be able to save commission cost by going the swing trading route.

Compounding

As a day trader, you will compound your earnings and account faster. Since you are able to trade the next day with the previous day's earnings, you are able to compound things more quickly.

With swing trading, you won't be able to use profits as quickly because you aren't closing positions as frequently – some may take 6-8 months.

Mental Attention

When it comes to your personal mental attention, you must be very focused with day trading. You need to watch the screens and markets closely, because you are constantly moving in and out of positions. You can hardly take a bathroom break – better be quick!

Swing trading is more relaxed. You understand what's happening and are more patient if the market pulls back. The process is more relaxed because you are looking at a longer outlook in time.

Personality Type

When comparing personalities, A-type personalities usually enjoy trading frequently (day trading).

Swing traders are the B-type personalities.

Who Makes More?

It depends on who’s the better trader...

It isn't up to the day trading process or the swing trading process; it's left up to the question of who the better trader is.

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Better Life?

As for who will lead a better life, it depends on the type of lifestyle you desire.

You have to establish what kind of lifestyle you want and go after the trading processes that will get you there. If you desire a more relaxed lifestyle, swing trading may be the best option. If you don't mind being busier and more focused, day trading may suit you well.

You can also be a hybrid trader. You can day trade during certain market conditions and swing trade during others. It's important to be adaptable as time progresses – otherwise you'll experience times of no trade if you only choose one type of trading over another.

Swing trading fits my personal lifestyle, but I do participate in day trading when the market conditions call for it. I even experience 2-3 months of time with no trading when the market conditions aren't set up for my style of trading.

You don't need to stick to one weapon of choice as the Ninja Turtles; mix it up and use other tactics to be more profitable!

Author: Sasha Evdakov

Sasha is the creator of the Tradersfly and Rise2Learn. He focuses on high-level education speaking at events, writing books, and publishing video courses on business development, internet marketing, finance, and personal growth.

I'm Sasha, an educational entrepreneur and a stock trader. In addition to running my own online businesses, I also enjoy trading stocks and helping the individual investor understand the stock market. Let me share with you some techniques & concepts that I used over the last 10+ years to give you that edge in the market. Learn More

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