When deliberating on which trading option traders should go for, it would be good for them to opt for any because both are good options for traders. As a matter of fact, the time frame for traders can have a significant impact on their trading activities and profitability. For day traders, they can see to the opening and closing of multiple positions in a single day.
Swing traders on the other hand indulge in trading activities that last for several days, weeks, and months depending the time range a swing trader wants. These two trading forms are suitable for various traders depending on the availability of capital, time, psychological trait and the kind of market being traded on. On a factual note, no trade style is better than other, it depends on the style a trader wishes to be trading upon in his trading engagements. Some traders adopt both while others stick to one, that is, day traders, swing traders and buy and hold investors simultaneously.
How both Work?
Day trading is of the attraction of traders that are eager for quick accumulation of profit of their investments. An example is when a trader takes the risk of investing zero point five per cent of his capital on each trade, if he loses, he will lose zero point five per cent. But if he gains, he will gain one per cent equivalent to two point one reward to risk ratio of the risk he has embarked upon in this trading. Furthermore, if he gains 50% of his trade, he will make six trades per day, on the average, he will be adding about 1.5% to his account balance daily. Gaining 1% a day would see to the growth of a trading account by more than 200% over the course of the year in terms of accumulation.
On the other side of this, numbers might be easy to be of replication due to huge returns, but the fact remains that nothing good comes easy in the process. One can make quick gains, one can as well witness rapid depletion of his trading account through his day trading activities. For swing trading, there is tendency for a trader to see to the accumulation of gains and losses in a repressive way than day trading.
A trader can still have some kinds of swing trades that will quickly lead to huge gains and losses. An example is, when a trader makes similar risky investment with the management rule and risks of 0.5% of his losing trades. He makes six trades monthly and gain 50% of the trades with the ease of his trading. Typically, in a month, a swing trader could rake in 3% gain in his account balance as well as in his less fees. This, on a yearly basis, comes out to around 36% which sounds scintillating but of less potential offer compare to a day trader’s possible earnings.
These explications above are used to see to the illustration of the differences that occur in both trading forms when traders are carrying out their trading activities. So, on a general view, backed with research, day trading brings more profit potential compare to swing trading.