Day trading includes specialized analysis and charting frameworks, often across multiple assets, executed on an intraday basis.

 

In comparison, swing trading can involve analysis across more asset classes and is based on price swings that take several days or weeks to materialize. 

 

When it comes to choosing a strategy, traders should select the methodology that fits their knowledge, abilities, and life circumstances. You can read more this in our guide to Choosing a Trading Strategy.

 

We will explore the differences between day trading and swing trading in this article.

 

 

What is Day Trading?

As the name suggests, day trading involves making one or multiple traders per day based on intraday analysis of stocks, futures, or cryptocurrencies. The specific amount of trades taken will depend upon the subcategory of day trading, such as scalping or news trading.

 

Day traders usually have an objective to earn a living from trading, and will attempt to be profitable on a daily basis. By definition, day traders don’t hold positions overnight, but there may be causes where this occurs, either by mistake or because they wish to take advantage of an opportunity that rolls into the next day. 

 

Day trading is a potentially very fruitful activity, but requires significant investment into knowledge and equipment.  Elite day traders are probably the most financially successful traders, but the expertise requires tireless study of the markets on a daily basis, with intense concentration where mistakes are unacceptable.

 

 

 

What is Swing Trading?

Swing trading is the art of recognising and capturing price swings across asset classes and having the patience to hold them for days or even weeks. 

 

The benefit of swing trading is that it requires less time and thus a swing trading strategy can be applied across more assets. It also means that swing trading strategies can be executed by traders with full-time jobs or other commitments, since the strategies generally require less screen-time and can be managed even by looking at only closing prices.

 

 

 

Is Day Trading better than Swing Trading?

 

Time Constraints

Day traders open one or multiple positions across a single day, whereas swing traders hold positions across days, weeks—and in some cases—months.

 

Both day trading and swing trading strategies can be similar, but with some nuanced differences. For a start, day traders may have to take positions with larger size, due to the fact they tend to capture smaller fluctuations in price, whereas swing traders will usually have wider stops on their positions. Both come with their own risks: swing trading has greater time risk, and day trading has greater slippage risk. You can read more about this in our article How to Measure Risk in Trading.

 

Generally speaking, a swing trading strategy can be executed by just looking at prices at the beginning or end of the day and adjusting orders. Day trading, however, requires keeping an eye on prices and news across the day or trading session.

 

 

 

Capital Constraints

It is important to consider capital constraints when comparing day trading to swing trading methods. 

 

For example, ‘pattern day trading’ stocks in the United States requires the trader to have a minimum account balance of $25,000. Swing trading stocks has no legal minimum in the US, but holding leveraged positions overnight will increase margin requirements. Naturally, specifics will be different across brokers and justifications, so it’s worth double checking in relation to your circumstances.

 

Another thing to remember is that trading the equivalent position size in a swing trading strategy will usually require more capital, since those strategies tend to have wider stops attached to their positions than day trading strategies. 

 

The upside of swing trading is that it can often be done with free or even delayed data, whereas day trading will require subscriptions to sometimes expensive data feeds and maybe even news squawk services. 

 

 

Equipment Consideration

As mentioned, swing trading is ideal for traders with other time commitments and positions can be managed once a day with just a laptop or even smartphone. But day traders usually require multiple screens, sometimes even multiple computers. 

 

Depending on their particular strategy, day traders will need to view a news feed, economic calendar, chat rooms, and of course multiple charts, all at the same time. This has significant costs, depending on the size and quantity of screens required, as well as the speed of the computer required to run all those platforms.

 

It is also vital for day traders to have a speedy internet connection and even backup connections, computers, and sometimes electricity generators, in the case of a costly malfunction during a trade.

 

Swing traders do not require all these things, and can sufficiently trade with just a laptop or arguably even a smartphone.

 

 

 

Conclusion

Day trading, on average, has a higher profit potential than swing trading, at least for smaller accounts. 

 

Alternatively, swing trading offers a wider audience the opportunity to profit from market fluctuations, due to the method’s lack of time and equipment requirements, as opposed to day trading. 

 

It is also possible to trade a combination of both methods, perhaps day trading into longer-term swing trades. Most importantly of all, the style of trading you choose should fit your personality and mindset, as well as personal circumstances.

 

Bookmap comes with the best tools on the market for both day traders and swing traders alike. Try it for free today. 

 

There is also Bookmap Web, which requires no download and offers greater zoom-out capabilities, something potentially vital for swing traders in particular.