Day Trading vs. Swing Trading vs. Position Trading 1 of 3
Day vs. Swing vs. Position Trading - Which style do you use, and which style SHOULD you be using!
Over the next three postings we will go through a simple explanation of each:
Day Trading:
Also known as 'Intraday', positions are usually entered & exited within the same trading day. Obviously scalping fits into this category. When traders start trading they usually begin with day trading because they feel they may miss a few pips when the market moves.
The 30, 15, 5, and 1 minute time frames are usually the charts used when day trading.
 Reasons traders’ trade this style some advantages:
- You can make more traded per day
- The results of your decisions are determined faster
- Makes you 'Feel Good'. Can be a rush!
- Allows you to always be actively participating in the market
- Positions are closed out overnight so unexpected market changes will not affect the bottom line.
- You can get more experience in less time
- You will get the feeling that you will not miss out on a move
- You feel that you can get in a trade sooner
Reasons why not to trade this style disadvantages:
By some estimates less than 1% of traders become successful using this method.
- It is time consuming
- Very difficult to trade properly if you have a full-time job
- Fast paced and can be very stressful
- Can get whip sawed in short term movements in the market
- Can be harder to predict the market
- Even a small mistake can result in a loss
- Have less time to make trading decisions
- More likely to develop addictive behavior (gambling)
- More likely to try and get even with the market
Day Trading Summary:
This is a great way to get a lot of experience in a short period of time. You can learn your trading system faster. The more trades you can make in a shorter period of time the more comfortable you will feel about trading and your trading system. This is a stepping stone to the larger time frames. You will usually make less money using this strategy.