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Know the Difference between A Day Trade & Swing Trade Here

NCFA Guest Post | July 16, 2019

Difference between a day trade and swing trade - Know the Difference between A Day Trade & Swing Trade HereOkay, so many of you are probably hella confused right now. After all, trading “in general” is already such a pain to understand. Divide it to even more branches and it all turns to gibberish, right? And just when you were finally ready to take the plunge too.

I don’t know where you saw it – in a broker site, YouTube, or maybe some stranger you connected with on LinkedIn mentioned it one or two times. Now, because you happened to read it somewhere, you’re back to square one, wondering whether you should push through your trading dreams or not. Well, I’m going to ease your confusion in just a bit so be sure to stick around.

First, you have to understand the very reason why you’re trading. This is not something you can easily turn your back to once you start digging deeper, after all.

Some people would say that they want to start trading because they see a lot of millionaires share their success stories of how trading made it possible for them. In other words, they want to sack the BIG money. For others, they simply get into trading to “get by” and earn a little extra on top of their day job. Then, there’re also a few odd balls who think trading is a pretty good way to make rack their brains. “It seems like a puzzle” they say. Check this out:  Making a million investing in stock

At the end of the day, I think that everyone who gets into this strategic and possibly life-changing activity would want to GAIN something – be it experience, knowledge of the market, or profit. But yeah, it’s mostly going to be about profit, and don’t you dare deny it!

"So, at the very least, consider yourself lucky that you have come across the term “swing trade.” For all you know, it is what’s going to change your life.

The Difference between A Day & Swing Trade

What you normally see advertised on YouTube ads is what we call “Day Trading.” This is often dubbed as fast trading because, well, it’s over in a matter of hours. One stock market expert (and trader), even likened the activity to a “one night stand” – just that, it doesn’t really last overnight, if you really think about it. It’s called a day trade because everything is done over the course of a single day, or less (check video).

For example, if the market opens at 10 AM, you start trading just shortly after – say, 10:45 AM. You do exchanges for the next couple of hours: Sell a few, buy a few, sell in bulk, and buy in bulk. You keep up with this routine until you’re all out of stocks. You end by 4 PM or something and you take your gains (or losses) back with you. Everything is settled within a day’s time and you simply repeat the whole thing the next day or whenever you feel like trading again.

Now, a swing trade is a little different. It is when you decide to let stocks sleep or stay put for several days (or months) at a time. You do exchanges, decide on ins and outs, and basically hold off on withdrawing stocks for a longer term. Say, you’ve studied a company well enough. You’ve been checking out the market and conclude that the company has a potential for big growth in the following weeks. You invest money and start trading for a span of 114 days (or nearly four months). During that time, you buy and sell stocks – just bits and pieces every now and then (or whenever conditions are favourable). But the bottom line is that you don’t totally withdraw all your stocks. In fact, you try to leave a bigger portion in the play field in hopes of maximizing the returns of your investments. When the trade is successful, you get way more than you would’ve trading day after day. If you lose, it’s not going to be too big of a loss either – unless something drastic happens, of course. Check out Trading Review to learn more.

General knowledge of the market would tell you that if you give a company time to grow, it will grow. This is why swing trading is more efficient in the long run. However, there’re also risks to such a method. Because you let your stocks sleep overnight, external factors may affect their growth. Natural disasters like earthquakes and super typhoons as well as product anomaly and company controversies can really reduce the value of a stock. These are risks that you won’t experience with day trading since everything happens fast and you don’t have to miss anything while you trade.

At the end of the day, it all comes down to how much you’re willing to risk.


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