HomeStock MarketIntraday Trading or Swing Trading - Which one is right for you?

Intraday Trading or Swing Trading – Which one is right for you?

Intraday Trading or Swing Trading – You can make money via the stock market by doing day trading or by doing investments. The person who buys and sells stock frequently is called a trader whereas a person who invests money in the stock for a long time is known as an investor.

When it comes to trading there are multiple trading methods available. This includes standard trading, momentum trading, intraday trading, swing trading, etc.

The basic idea behind this post is to discuss the difference between Intraday Trading and Swing Trading so that you can decide which method is right for you.

intraday trading swing trading

Intraday Trading

Intraday trading means buying and selling stock of financial securities on the same day before the market closes. This means trader exit their position every day before the closing of the market. Intraday trading is done to make a profit. This means day traders look for profit from short-term market volatilities.

For example, I am a day trader and I purchased 10 shares of Infosys at Rs.1350 per share on 28th March 2023 at the time of opening the market. After 2 hours share price reached Rs.1390 and I sold all 10 shares at Rs.1390. In that case, my day trading profit would be Rs.400.

Swing Trading

Short-term swing trading involves traders holding securities for longer than a day, then exiting their positions after a short period. The name swing trading is given as the trader wants to take benefits of short-term swing in the stock. In swing trading, both fundamentals and technical parameters are taken into account for the selection of securities.

For example, My friend Hardik is a swing trader. He purchased a stock at Rs.1110 after noticing a bullish signal and he put a stop-loss at the recent low of Rs. 1050. He found the stock increasing in the two weeks, and an opportunity to gain Rs. 50 per share. He checked the fundamentals to strengthen the trade. After evaluation, he sold the stock for Rs. 50 per share profit.

Difference Between Intraday Trading and Swing Trading

Trading Pace 

One of the key differences between day trading and swing trading is the trading pace or trading frequency. Day trading is fast and reactive in nature. It involves entering and exiting multiple trades within a single trading day. 

Swing trading is slower-paced and patient. Swing traders open and close multiple positions over a few weeks. Therefore, trading pace & frequency is higher in day trading as compared to swing trading.

Attention required

 A day trader is required to invest around two hours every day to monitor and track short-term price movements. It can be termed full-time employment. A swing trader usually doesn’t take up trading as a full-time job and invests less amount of time. This means day trading required more attention compared to swing trading.

The number of transactions

Day trading involves more transactions as compared to swing trading. Day traders make plenty of transactions daily, whereas swing traders enter a less amount of transactions and exit after a few days or weeks.

Level of Monitoring 

Day traders make use of advanced charting systems. They monitor the trade every 5,10 or 30 minutes. Day trading requires frequent monitoring. Swing traders make use of less complex charting systems and the monitoring interval is also low. 

Cost

Since brokerage fees increase with more frequent transactions, the costs are higher in day trading. Therefore, day trading involves higher costs as compared to swing trading.

For example, if a trader bought shares three times within a day, each time he will have to pay the brokerage. Swing traders buy the shares and hold them for two weeks. They will have to pay the brokerage fee a single time.

Requirements 

Day trader requires a special type of brokerage account where brokerage charges are low. Day trader also requires a special type of trading software with charting for doing in-depth study before securing any position in the market.

Suitability

Traders who are capable of making quick decisions are suitable for day trading. Furthermore, it is suitable for traders who can devote most of their time to trading. Day trading is also less beginner-friendly.

Swing trading is a good option for traders who have little trading experience. Moreover, traders who cannot dedicate more time to trading can opt for swing trading.

Position Square Off

A swing trader can square off positions according to their convenience. whereas day trader has pressure to square off their position on the same day. Thus swing trading can be very profitable with a good strategy and proper risk management.  

Intraday Trading or Swing Trading – Which one is right for you?

Trading in the stock market has become a full-time profession, especially day trading. It requires skill, knowledge, and a lot of experience. Both Intraday and Swing Trading is a good methods for doing trading. However, both have their own advantages and risks. You need to select your trading method based on your skill, experience, goal, trading pace, and risk-taking capacity.

If you are trading for the first time it is advisable to learn it and for that, you can try swing trading. Swing trading is a good option for the beginner. It is a slow pace and helps you to decide at peace. Additionally, you do not need full-time attention to do swing trading. 

But, if you are experienced and you know how the market works. You have traded in stock before you can think of becoming a day trader. You require proficiency in reading charts and taking quick decisions on trade positions. Your risk-taking capacity should be higher and you should be able to spend more time doing day trading. You also need to undergo training or a course to become a day trader. 

In short your decision of becoming a day trader or swing trader depends on a lot of factors. Both these trading types has own set of benefits and drawbacks. You need to select your own trading method day trading or swing trading. 

Shitanshu Kapadia
Shitanshu Kapadiahttp://moneyexcel.com/
Hi, I am Shitanshu founder of moneyexcel.com. I am engaged in blogging & Digital Marketing for 10 years. The purpose of this blog is to share my experience, knowledge and help people in managing money. Please note that the views expressed on this Blog are clarifications meant for reference and guidance of the readers to explore further on the topics. These should not be construed as investment advice or legal opinion. We do not offer any stock tips, investment, insurance or finance product related advice. Please consult a qualified financial planner and do your own due diligence before making any investment decision.
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