It’s estimated that anywhere between 70-80% of all retail traders in the forex market lose money. The reason isn’t that the financial markets are unfair, but rather that many traders aren't executing the right strategy. The truth is that many traders don’t understand what kind of trading style would work best for them.
The reality is that swing trading and day trading are like chalk and cheese, even though it might seem like they’re not that different. It’s not just that the timeframes and the kind of technical analysis required are different. It’s a question of your personality, your lifestyle, your ability to thrive under pressure, and whether you can maintain strategic patience.
Do you have it in you to stare at charts for six hours straight? Or do you already have a demanding career that doesn’t leave enough time for intraday trading? In this article, we’re going to help you figure out which trading style – swing trading or day trading – is best for you.
What's the Difference Between Swing Trading vs Day Trading?
As the name suggests, day trading involves buying and selling financial instruments within the same trading day. You need to close all your positions before the end of the trading day.
Day traders spend their day executing multiple trades and riding short-term price fluctuations lasting anywhere from a few minutes to a few hours, but never into the next trading day.
Swing traders, on the other hand, can hold positions for a few days to even several weeks. For a swing trade, the game is to find bigger price fluctuations in financial instruments. Instead of numerous trades, swing traders might open just a few trades per week – or even just a couple every month.
Day traders never face overnight risk because they close all their positions by market close. Swing traders accept overnight risk willingly, betting that market movements over a few days will deliver better profit potential than intraday trading.
Key Differences: How Swing and Day Trading Actually Work
Before diving into specifics, here’s a snapshot of how day trading and swing trading differ in key areas like time, capital, and stress levels.
Time Commitment
Day trading is more like a full-time job, no matter what anyone tells you. Professional day traders often spend 2-5 hours watching the markets and executing trades. Then, after hours and prior to market open, they often spend more time reviewing the trades of the day and tracking their wins and losses.
Swing traders, on the other hand, might spend about half an hour or maybe an hour a day in front of their screens during market hours. Their actual time may be spent more on scanning for trading opportunities they want to pursue over the next few weeks and adjusting their stop losses and take profit levels as the market shifts.
People with demanding careers should only consider swing trading as an option. If you cannot manage the time commitment day trading needs, it simply won’t be a feasible option for you.
Capital Requirements
Neither swing trading nor day trading has specific capital requirements, per se (depending on how many trades you make). However, bear in mind that swing traders make fewer trades and can hold their positions much longer than day traders. Hence, commissions and broker fees do not impact their trades as much.
Of course, how much capital you actually need depends a lot on your trading style and the instrument you are trading.
Risk Tolerance and Stress Levels
Quick decision-making and the ability to handle constant pressure are what make day trading riskier than swing trading. Markets constantly change, and a single bad decision can cause a day trader to lose his entire profit for the week.
But swing trading is certainly not a walk in the park either. Overnight risk from news events can completely derail weeks of careful trade setup and planning. That is why proper risk management is essential for both types of traders.
Success Rates and Profit Potential
Recent research shows that just 13% of day traders are able to maintain consistent profitability over a period of six months. Stretched over five years, the numbers dwindle down to 1 in 100.
Swing trading strategies have better odds than this. About 10% of swing traders make profits across a 1-year period. Profit potential is again a controversial topic. Day trading focuses on making small profits every day that add up to a bigger number over a longer period. Most day traders aim for a 1-2% gain on capital after accounting for commissions and fees.
Swing trading typically targets 10-30% profits per trade, with much fewer trades. Swing trades are generally considered less risky than day trades.
Trading Strategies and Analysis
Technical Analysis: Different Tools for Different Trading Styles
Both swing trading and day trading rely heavily on technical analysis, but where the two trading styles differ is in the use of indicators and the timeframe for executing trades.
Day traders rely on momentum indicators like RSI and MACD and advanced charting systems for making minute-to-minute decisions. Their chosen financial instruments are usually highly liquid US stocks, futures and forex.
Swing traders typically use daily charts instead. They employ both fundamental and technical analysis, instead of relying solely on technical analysis. This means that apart from checking trend lines and support and resistance patterns, they also check sector trends and earnings reports, things that day traders usually don’t worry about.
The Actual Trading Day: What Each Style Looks Like
For a day trader, the morning usually starts early. Day traders often check overnight news, searching for gapped stocks, and planning entry and exit points.
As soon as market hours begin, so does the constant monitoring of the charts and news. A few trades are often placed early morning and many are closed by lunch. Then, depending on what the market is doing, day traders may place trades in the afternoon, too.
For swing traders, the day is not spent glued to a screen. They set up much fewer trades – maybe just one or two a week. The idea is to decide on a profit target, identify stop losses, set up the swing trade, and then just let the trade play out.
Of course, swing traders do check in periodically, but most of the time they let the trades play out over a few days, or maybe even several weeks. This is typically much less time-consuming than day trading.
Personality Assessment: Which Trading Style Fits You?
The Day Trader Personality
Day trading is best suited for those who can think fast and be decisive under pressure. Quick decision-making is essential for them because even a slight bit of indecision can be the difference between a profitable day and a bad one. If you’re built with nerves of steel and love excitement, day trading might be well-suited for you.
But remember, day trading may be difficult if you’re thinking of balancing it with another full-time profession. The kind of time commitment that is required for this trading style may not suit everyone’s lifestyle.
The Swing Trader Personality
Swing traders may be patient and disciplined people, and not necessarily need nerves of steel like day traders do.
A patient, analytical mind is essential for swing trading. It's like playing chess with the market; you shouldn’t make even a single move without pondering over all the implications.
This trading style may be well-suited for those who already have a demanding career in another field but are looking to add another stream of income, or someone with more time on their hands, but who feels day trading is just “not their thing”.
Most people can manage to swing trade effectively by checking the market every so often, unlike day trading, where you need to watch your trades closely during market hours.
Quick Self-Assessment Quiz
Here’s a quick quiz to help you determine which form of trading would be best suited for you:
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Will you be able to commit 2–5 hours every day to active trading? (Yes = Day Trade | No = Swing Trade)
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Are you good with high-pressure decision-making? (Yes = Day Trade | No = Swing Trade)
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Does the thought of leaving overnight risk cause you stress? (Yes = Day Trade | No = Swing Trade)
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Do you normally remain unfazed by loss? Can you handle the constant emotional turmoil of handling multiple trades in a day? (Yes = Day Trade | No = Swing Trade)
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Do you prefer big moves over small swings? Does the thought of having to execute fewer trades excite you, or do you need constant thrills in your life? (Yes = Day Trade | No = Swing Trade)
If most of your answers were “Yes,” then day trading might be suitable for you, as long as you keep the time commitment in mind. Otherwise, Swing trading may be better suited.
Risk Management: The Only Reason Some Traders Survive
The fact is that most traders fail not because they aren’t able to craft the right trading strategies, but just because their risk management skills are poor.
If you can’t protect your capital, you’re simply not trading right.
Position Sizing and Stop Losses
For day traders, there’s the famous 1% rule: no single day trade should carry more risk than 1% of your total account value. For example, if your account is worth $30,000, then your risk per trade should never exceed $300. All stop losses should be placed keeping this fact in mind.
Since there’s a lot of quick decision-making involved, most day traders prefer keeping their stop loss very tight.
For swing traders, typically 2% per trade is an acceptable amount to risk per trade. There are fewer trades involved, so for a $15,000 account, the maximum risk should be $300 per trade.
Swing traders set wider stops because otherwise they might lose their positions to normal market fluctuations. Day traders don’t have that luxury.
A Trading Plan
Part of what separates amateurs from professionals is a clear written trading plan. Before opening any position, you should know:
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Exact entry and exit points
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Position size based on risk tolerance
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Profit target and stop loss levels
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Maximum daily/weekly loss limits
Having a clear trading plan doesn't guarantee profits, but not having one sets you up to fail.
Market Conditions and Trading Opportunities
Best Markets for Each Style
Day traders prefer to operate in markets that have high volatility and significant volume because they need to close their trades during the same trading day.
They may prefer to trade instruments that have a lot of price action and forex pairs like EUR/USD, especially when there is overlap between the market hours of London and New York.
There is no such constraint for swing traders. They can open positions across many financial markets, since they hold positions for anywhere between a few days to several weeks. Stocks, ETFs, and other financial instruments are all fair game for them.
Adapting to Market Movements
The two trading styles differ significantly in how they use market movements to make profits.
Day trading uses momentum indicators to set up positions that benefit from short-term price fluctuations within the same trading day. It involves trend trading to evaluate trade setups for their profit potential through small price fluctuations.
On the other hand, swing trading largely ignores short-term price movement. Instead, swing trading strategies look at broader price movements across a few days or even several weeks.
Swing traders generally wait patiently to capture the “swing” between pullbacks and continuations. They track broader market movements instead of second-by-second market fluctuations.
Which Trading Style is Better for You?
Neither strategy is necessarily “better” than the other. Instead, each strategy demands different personalities, lifestyles, time commitments and resources. If you love quick decision-making and can dedicate more time to learning it, then day trading might be good for you.
Swing trading might be a good fit for you if you already have a demanding job and prefer making calm, calculated decisions rather than thriving on exhilaration. The statistical success rates are also slightly higher.
The Hybrid Approach Some Traders Use
If you’re still unsure about choosing trading styles, there is a middle path. Some traders combine swing trades for their primary positions with occasional day trading when they are sure the market is going to see a lot of volatility.
This way, you put the bigger portion of your investment capital into the relatively stable swing trade while still getting the occasional kick out of day trading from smaller “play money” you can gamble with.
Just be sure not to confuse the two strategies. Don’t start turning a swing trade into a day trade just because there is panic in the market. Neither should a day trade magically become a swing trade just because you failed to put the right stop losses in place.
Getting Started: Your Next Move
Whether you choose swing trading vs day trading (or both), here's an action plan:
For aspiring day traders:
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Paper trade for at least a few months before risking real money
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Master proper risk management and position sizing
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Study price action in one market
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Develop your overall trading plan with specific rules
For aspiring swing traders:
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Learn both fundamental and technical analysis
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Practice setting wider stop losses without panicking
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Accept overnight risk as part of the strategy
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Focus on 2-3 swing trading strategies you can master
What Happens Next in Your Trading Journey?
The choice between Day trading vs swing trading is not really about the two trading styles; it is more a reflection of your own personality, risk-taking ability, and expectations out of trading.
Many traders quit within their first year because they didn’t bother to understand that their personality does not suit the trading style they got into. Don't become part of that statistic.
Figure out what works for you – and then stick with the trading style you have chosen.
