Swing Trading Vs Day Trading; Which One is More Profitable?

Handy Tips / 21.03.2021

Do you want to invest in the financial and crypto markets but have no idea what trading strategy to use? Thousands of other beginner investors worry about the same every other time.

Of course, there are several trading strategies, each with different profit potential. When considering the trading strategy to deploy, a trader needs to understand the different aspects affecting trading including, time/availability, capital, and expected returns, among other factors.

Time especially requires serious consideration since the investor should know their availability and when to join and leave the market. We will compare two popular time-based trading strategies, i.e., day trading and swing trading. In the end, an investor should understand which trading strategy between the two is more profitable.

Day Trading

Day trading is where a stock or a crypto assets trader takes trading positions and closes them on the same day, i.e., within 24 hours. For instance, a trader may take a trading position at 2.00 a.m and close their position at 1.00 a.m.
The idea of day trading is to ensure that once the trader logs off their account at the end of the day, they don’t have to worry about any market changes that may happen afterward. Moreover, day trading involves multiple trades in just a single day.

Day trading requires the trader to be present with their account all the time, to make decisions based on the market changes. Thus sometimes, day traders lack recreation time since they are on their screens all day.

Different platforms set different trading minimums for day trading. For a day trader to make excellent profits, they have to invest large sums of money.

One quality noted from day traders is that they are quick in making decisions based on the prevailing market charts. Although day traders aim to earn income daily, they don’t pick any asset; instead, they do robust research on the asset. Day traders consider the volatility, their ability to break the resistance level, etc.

Day trading is hectic. Thus, it requires traders to work well under lots of investment pressure and concentrate for longer durations.

Swing Trading

Swing trading involves trading that takes longer durations, days, weeks, or months. Swing traders aim to maximize their incomes in the long run. Therefore, they take long market positions.

A swing trader does not spend their entire time on their account; instead, trading is more like a part-time job; therefore, they maintain daytime jobs. Swing trading is relatively simpler than day trading. Decision-making is slower; thus, any investor with investment knowledge can participate and earn incomes in the long term. Swing traders must be patient and highly optimistic.

The advantage to swing traders is that they can start their orders even when the market is closed. Swing trading is more popular than any other form due to its ability to save time for users.

There are no minimums in swing trading capital requirements for stocks. In crypto, the minimum requirement varies depending on the platform of choice. However, most people’s preference is $1k or more to make a reasonable income. Depending on how you want to align your portfolio for swing trading, you might need more money, probably $10k or even $20k.

The Potential for Profits Between Day and Swing Trading

Generally, the potential of earning excellent incomes is very high in day trading more than in swing trading. The effort, time, and capital spent in day trading is often higher than that of swing trading.

A day trader has expertise in investments and business. Therefore, the trader knows the best time to join and exit a market with maximum profits per trade. Moreover, day traders can take advantage of even the slightest market volatilities and emerge at the end with high profits.

Although the potential for returns is high, the risk level in daily trading is high as well. You may make excellent incomes only to lose them before the day ends in another trade.

Swing traders have massive potential for earning great returns, only not as high as those garnered by day traders. The traders’ earnings grow a little slower than day traders. However, depending on the trader’s level of expertise, they have excellent chances of making as much as day traders.

Since the return accumulation for swing trading is slower, the risks are also lower. Swing traders can stay longer in the market and exit when the market is profitable, thus hedging against risks.

Finally

As a trader, either in stock or crypto exchanges, you need to identify the best trading strategy that suits your profit needs. It has never been easy for any crypto beginner. However, when making investment decisions, consider the value of your capital and your availability.

If you have enough time or can be available 24/7, then day trading is a better option. However, if you have lower capital and less time, then swing trading could be the better option.

It would be better as a new trader to use demo accounts first to see which investment strategy suits you best. Of the two trading strategies, day trading is the better option since it offers excellent profit potential.

Adam is an outgoing young lad who likes adventures and discovering new things. Despite his boring life, he loves writing about cryptocurrencies and exploring what blockchain technology can do for the coming digital world where all adventures will be virtual.