Day Trading vs. Swing Trading in Forex: Which Is Better?
If you are new to the world of trading, there is a high chance that you’re constantly glued to the charts. You might even find yourself falling asleep with your phone in hand, staring at charts. In other words, there is a high chance that you are spending an unreasonable number of hours staring at the charts. Now, if this all sounds familiar, we recommend that it’s time to opt for swing trading, as swing trading will be a complete game-changer for you.
However, before you start the pros and cons of swing trading in comparison to day trading, let us get an overview of both trade types first.
Day Trading vs. Swing Trading
If you are brand new to the world of forex trading, we recommend that you get an in-depth understanding of the world of forex, especially when it comes to answering the question of what is forex trading. Essentially, forex trading is about purchasing and selling currencies where both swing traders and day traders participate.
Day trading incorporates maintaining positions for a short period, which means that day traders often close their trading positions within the same day. On the other hand, swing traders maintain and hold their positions for a few days, even a few weeks. The essential goal of holding positions for a longer time is about capturing the bigger price swings.
Breakdown of Differences between Day Trading and Swing Trading
The truth about day trading is that it can be very stressful, especially when you’re new to trading. In its essence, day trading intentionally focuses on short-term price movement, which means that a day trader can only hold positions for a few minutes or a few hours. On the other hand, the time frame for swing traders to hold positions can last up to weeks.
Potential Risks and Rewards
Another potential difference you know between swing trading and day trading is the potential risks and rewards. Day trading, understandably, incorporates higher risk but also higher rewards due to the frequency of trading. On the other hand, swing trading incorporates lower risks for each trade; however, the reward is lower too compared to day trading.
Trading Style and Risks
If you enjoy and love the pressure of high-intensity trading, then day trading might be a suitable trading style for you since you are comfortable with the higher risks. However, if you are new to the trading world, then swing trading is certainly a better option due to its less demanding and less intense approach. Also, swing trading is great for you if you’re comfortable with holding trading positions for a longer time.
How to Know if Swing Trading is Better for You?
If you want to trade without high stress and high risk, then swing trading is certainly a better choice. With swing trading, you don’t really need to act quickly and make fast trading decisions, as you can leverage the broader time frame. The trade duration and risk tolerance with swing trading are generally lower than those of day trading. This aspect perfectly indicates why swing traders maintain a more measured approach, as they don’t have to rush from one trade to another. With that said, if you want to take off the stress and diminish the risks, then you know for sure that swing trading is better for you in the long run.
