October 3, 2022

Differences between Day Trading and Swing Trading

Differences between Day Trading and Swing Trading

Day trading simply involves the buying and selling of financial instruments (stock, bonds, futures, and commodities) to generate profits from price changes all during a trading day. Just like the name suggests, all trading activities are conducted and closed before the end of the trading day to mitigate risk.

Swing trading, on the other hand, involves identifying and capturing a trend for profit. Swing trading can be done overnight or over a short period of time (typically a few weeks). When it comes to day trade vs swing trade, there are some key differences you should take note of, such as;

Number of transactions

Day trading typically involves traders who want a very fast returns compounding. This is because day traders often buy or sell securities multiple times, all on the same day. They also commonly follow a 1% (one percent) risk rule, which states that, as a trader, you must never risk anything above one percent of your trading portfolio on a single trade. This basically means that a larger number of lesser trades are accumulated to make up a profit.

With swing trading, gains as well as losses are accumulated at a slower rate than in day trading. However, it is possible to get some swing trades that rapidly end up in significant gains or even losses. Simply put, with day trade vs swing trade, day trade has a higher profit potential, especially when trading with smaller accounts.

Holding time

This is a major differentiator between day trade vs swing trade. Where a day trader may comfortably hold a trade from 2 minutes to a few hours, swing traders are subject to holding a trend for the period of that trend or swing.


The frequency of the trade is another key difference between trade vs swing trade. Day traders can open and close multiple positions all within a single trading day, but with swing trading, traders can take trends have(trades) that could last anywhere from overnight to even 2 days or months.

Level of Commitment

When it comes to day trade vs swing trade, the level of trading commitment required by each of them can be a determining factor for which one a trader decides to go for. Day trading requires a full-time commitment with constant analysis, monitoring, placing of trades, and selling off positions done across multiple trades and within the span of the open market day.

With swing trading, the commitment level is a little more flexible as it often requires just a few hours of trading a day. The remaining time is spent passively holding the position until it is time to sell-off.


Trading costs is something that is unavoidable regardless of whether you are a day or swing trader. For an active day trader, you are either paying commissions on the positions you open and close or paying the spread. With swing trading, you would either pay or receive overnight swap rates. Paying commissions or spreads on your trades are also involved.

Market swing

Since swing trading requires an overnight trade, there can be some significant risks involved. Such as; slow trading hours, which can lead to widening spreads, and erratic price action, which is usually more prevalent during off-market hours. Day trading, on the other hand, experiences the risk of volatile markets, especially during peak trading hours. So, when it comes down to day trade vs swing trade, the risk involved in day trading is much easier to mitigate since it happens during the day.

Trading method

Day trading requires you to set up your account with your broker, get a reliable computer system and the most updated trading software that allows you to gain access to all of the resources needed to achieve the best out of all trading activities you indulge in.

Automation is very important as the day trading market is volatile and prices may change very quickly. Thus, giving you very little time (matter of seconds) to make a trade. With swing trading, the time to trade is much longer. Swing traders can also make use of online brokerage accounts to create positions and trade.

Day trade versus swing trade, which is better?

Before deciding which trade is better for you, you need to consider factors like; pace, focus, stress, and flexibility, then go for the trading method that suits you best. Both day trading and swing trading require ample knowledge of trading strategies and how the stock market works in order to produce results.


When it comes down to day trade vs swing trade, one isn’t necessarily better than the other. They each suit different needs and require the technical know-how of trading strategies. As a trader looking for consistent results from either day trading or swing trading, you will need to build your knowledge and constantly practice different trading strategies under several market scenarios. Visit blogs like stoctlatest.com to keep yourself updated with information on current trading software and market trends.

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