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Day Trading or Swing Trading?

Before you start trading you must find out what type of trading style will suit you best, depending on the available time you have during the day.

You must know if you would have the time for trading on a daily basis, which basically means you place your trades during the day and close them at the end of the day.  On the other hand, if you already know the answer, then your preferred trading strategy would be Swing Trading.

The difference between Day Trading and Swing Trading is the time frames used in order to determine when to enter and exit a trade and should you be Short or Long. You will find out that there are a lot of benefits and advantages so you can choose which strategy will suit you best. A quick overview of both Day and Swing trading strategies will show that there are several factors you should have in mind.

These trading strategies can be separated into the following categories – profit per trade, trades per day, risk-reward ratio, fund management, Sharpe ratio, Sortino Ratio, Max Return Run-Up, Max Return Drawdown, Max Profit Run-Up, and Max Profit DrawDown.

Day Trading encourages trades made during specific time frames. It requires screening and analyzing markets every single day in order to be able to make quick decisions. For example, most of the Day Traders use smaller time frames ranging from 5 Minutes time frame to 4 Hours time frame in order to determine support/resistance, highs, and lows levels during a specific day and enter and exit multiple trades during that day. Day Traders are after ten to a few hundreds of pips profit per day.

Swing Trading functions in a similar way with regard to analysis, but it is not as crucial to place multiple trades in a single day, as it expands over the period of several days, weeks, or months. Swing Traders are after thousands of pips profit per trade. Sometimes they have to wait for some time in order to exit a trade, but after all the profit never lies.

Day Traders can enter/open and exit/close a trade from once a day to hundreds of times a day.

Swing Traders wait for the Swing in order to place their trade.

Due to the smaller time frames Day Traders use, the profit targets can be very close to the risks they take. When a trend occurs, it is often within a few hours that day traders can make or lose the most.

Funds are managed differently in Day Trading and Swing Trading.

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Author

  • Zahari Rangelov

    Zahari Rangelov is an experienced professional Forex trader and trading mentor with knowledge in technical and fundamental analysis, medium-term trading strategies, risk management and diversification. He has been involved in the foreign exchange markets since 2005, when he opened his first live account in 2007. Currently, Zahari is the Head of Sales & Business Development at TraderFactor's London branch. He provides lectures during webinars and seminars for traders on topics such as; Psychology of market participants’ moods, Investments & speculation with different financial instruments and Automated Expert Advisors & signal providers. Zahari’s success lies in his application of research-backed techniques and practices that have helped him become a successful forex trader, a mentor to many traders, and a respected authority figure within the trading community.