Day Trading vs Swing Trading. Which is better?

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Definition of Swing Trading

Day trading and swing trading are an alternative way of earning a living, but there are differences between them: the degree of difficulty, the amount you can expect to earn and the amount of money required to start.

This article will help you decide if these are right for you.

→ What type of Trader are you?

Swing Trading – 3 Tips you should know

The Degree of Difficulty

The costs of day trading are extremely high. It will even be difficult to take a few minutes to go to the bathroom while trading is going on. You will have to analyze charts and make fast decisions before you can begin to make one trade (you can use multi-time analysis).

Some people can make trades for several hours each day, but We know that sitting in front of a screen all day is very hard to do.

Swing trading techniques is much easier! You have to keep an eye on your stocks to know what is going on, but you can be more casual. Swing trading means that you will plan when you are going to enter a trade and when you are going to exit, but you aren’t going to be making as many trades.

Try reading some swing trading books to get a better understanding.

→ Learn When to Enter and Exit While Trading

The Amount You Can Expect to Earn

Swing trading doesn’t take a long time to complete a trade in a day trading strategy. You can trade with one-, three-, five- or 15-minute charts.

Because this is a course way of trading, you must be able to alter the amount that you expect to earn with each trade. The fact is that making money from this type of trading means that you must earn more than a few pennies on each trade.

You have the potential to make more money with swing trading strategy. You have the option of aiming for a 20 percent gain or even more. Swing trading allows you more time, and that’s why there is a possibility of earning more money.

For example, if you have a set profit target, you can allow your profits to run because you have a longer holding period.

The Amount of Money Required to Start Swing Trading

The cash to expenses ratio needed in a full-time day trader’s account is 50:1. Those who have an extra source of income can bend this rule a little.

If your monthly expenses are equal to $3,000 a month, you will be required to have $150,000 in your account before you can begin trading.

If you were thinking that this number seems high, you would be right! The point is to make sure that you can afford to trade without losing everything. You should also be careful with which swing trading software and system you will use.

Swing trading can be done in your spare time while you keep your job, so you can decide how much money you wish to risk. If you want to quit your job, then your cash to expenses ratio must be 100:1. This number is higher because it can take as long as a month to complete, so you won’t have a source of income during that time.

With this higher ratio, there is only a risk of losing one percent of your capital every month if your trades last longer than you expected.

One of the best strategies → Swing Trading Using ETFs.