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Is Swing Trading the Same As Day Trading? (What is the difference between swing traders and day traders?)[Explanation]

Last Updated on 17 February, 2024 by Rejaul Karim

Swing trading has a lot in common with day trading. After all, they are both active forms of trading and tend to rely mostly on technical analysis for identifying trading opportunities. But is swing trading the same as day trading?

No, swing trading is not the same as day trading. While they may share similar features in certain aspects, they differ in so many areas, such as the trading timeframe, trade duration, frequency of trading, initial capital, trading cost, and others. Most importantly, swing trading can be done part-time, while that is almost impossible for day trading.

In this post, we will discuss the main differences between swing trading and day trading, and later on in the article, we will discuss how you chose the best trading style for you. But first, let’s find out what swing trading and day trading mean.

What is swing trading?

Unlike day trading that focuses on intraday price movements, swing trading tries to benefit from medium-term price moves that occur on the daily timeframe. The idea is to ride the price swings, one swing at a time, and those swings often last from a few days to some weeks. Swing traders try to enter at the beginning of a swing and jump out before an opposite swing starts. They use some technical analysis strategies to know when to hop in and out of the market and rarely bother about the effects of market news.

Is Swing Trading the Same As Day Trading? (What is the difference between swing traders and day traders?)[Explanation]

What does day trading mean?

Day trading is a style of trading where the trader opens and closes a trade within the same trading day. The idea is to capture the main price move of the trading day, which can happen in a few minutes or over several hours. Day traders make use of technical analysis and do their analysis on the lower intraday timeframes. They are also watchful of the day’s market news, which can have a huge impact on the outcome of their trades.

How swing trading differs from day trading

Swing trading differ from day trading in many different ways, but here, we will only consider the following:

Timeframe

In swing trading, the price charts are analyzed on the daily timeframe because the price swings that swing traders try to capture are the swings on the daily timeframe. However, swing traders do step down to the 4-hourly timeframe to pick better entry levels.

For day trading, on the other hand, chart analysis is done on the lower intraday timeframes, such as the 5-minute to 1-hour timeframes.

Frequency of trading

With swing trading, you get to make a few trades per week because you may not get trade setups every day, even if you increase the number of stocks and markets in your watchlist.

On the other hand, day trading offers you multiple trade setups each day so you get to make several trades in a day.

Trade duration

A swing trade often lasts from a few days to a few weeks. Sometimes it may last several weeks. It all depends on how long the price swing is in play.

For day trading, every trade is expected to be closed by the time of the day’s closing bell, even though some day traders may still extend their trading into the after-hours trading. In terms of duration, the trades tend to last from a few minutes to several hours.

Time commitment

Swing trading does not require too much time commitment because the analysis is done on the daily timeframe, with new data for analysis coming at the end of the trading day. Hence, you can perfectly swing-trade part-time and easily combine it with your 9-5 job.

Day trading is a full-time job. You analyze the market on the lower timeframes, with new data printed every 5 or 15 minutes, so you have to constantly monitor your screen.

Capital requirement

You can start swing trading with as low as a few hundred dollars, but officially, you will need $25,000 to day trade on the US Stock Market, though some broker can circumvent this rule by offering you stocks from other markets.

Profit per trade

Generally, swing trading makes more profit per trade than day trading, and the reason is simple: the price swings on the daily timeframe are much larger than intraday price movements.

Trading cost

With swing trading, you get to trade less often than you do in day trading, so you pay less in commission and other trading costs, such as the cost for live data. However, since swing trades last over the night, they are more prone to overnight and weekend risks from price gaps and slippages, which can add to your cost.

How to choose the right trading style for you

Now that you’ve seen the key differences between the two styles of trading, which of them is suitable for you? Well, you need to consider your personality and circumstances. If you like working in a fast-paced environment and making quick decisions, day trading may be fine for you, but if you prefer taking time to analyze and think things through before making a decision, swing trading may be a better option.

Furthermore, if you have a 9-5 job, swing trading is your only option. For beginner traders, we usually advise that you start with swing trading until you master the market.

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FAQ

How does day trading differ from swing trading?

Day trading involves opening and closing trades within the same trading day, capturing short-term price moves. Unlike swing trading, day trading occurs on lower intraday timeframes, with multiple trades executed in a day.

What timeframe is used in swing trading & day trading?

Swing trading primarily analyzes price charts on the daily timeframe. However, traders may also consult the 4-hourly timeframe for better entry levels. Day trading involves chart analysis on lower intraday timeframes, such as 5-minute to 1-hour timeframes.

How often do swing traders trade?

Swing traders make a few trades per week, as trade setups on the daily timeframe may not occur daily. On the other hand Day traders execute multiple trade setups each day, taking advantage of intraday opportunities.

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