You’ll have many trading strategies to choose from as a CFD trader, but among active and serious traders two strategies dominate: day trading vs swing trading strategy. Which strategy is right for you? Xtrade has assessed the advantages and disadvantages of both Forex trading strategies.
In both, the goal is to profit from movements in the price of an underlying asset, usually a stock, a commodity, or a currency. As the name suggests, day trading involves making several trades in a single day. For a day trader, the aim is to earn a living from online CFD trading by making small profits on several trades and capping losses on unprofitable trades. Day traders seldom leave positions open overnight.
By contrast, swing traders try to identify price swings over longer periods—days, weeks, even months. These trades require time, as a result of which swing trading is seldom a full-time career. Below, Xtrade discusses the advantages and disadvantages of day trading vs swing trading strategy.
Is Day Trading the right Forex strategy for me?
Potential for considerable profits: A disciplined trader can make serious profits from day trading, However, and this cannot be stressed enough, successful day trading requires immense discipline. If you are incapable of keeping your emotions under control, stay away from day trading. Profits can be huge, yes, but day trading also involves considerable risk of loss.
Independence: As a day trader, you’ll set your own hours and be your own boss. A wonderful life, right? For many, yes; for others, the idea of being on their own—no boss, no regular pay check, no benefits—is frightening.
Excitement: There’s never a dull moment in the life of a full-time day trader. The markets are always on the move, and many day traders love testing themselves in this fast-moving, highly charged environment. For this reason, day trading does not appeal to those who prefer quieter, less stressful environments.
Education is not a requirement: For a job in finance, education—often a degree from an Ivy League university—is a prerequisite. That’s not the case in day trading, the basics of which can be learned from a good book or reputable online resource.
Or is the Swing Trading Forex strategy suiting me better?
Does not require constant monitoring: Swing trades take place over periods of days, weeks, and even months. As a result, swing trading is, for many, a perfect part-time investment. If you want to keep your day job and trade on the side, swing trading will suit you better than day trading.
Less Stress: Since swing trading is rarely a full-time activity, burnout is uncommon. Swing traders usually have full-time jobs and a regular source of income with which they offset trading losses.
Cheaper Technology: Day trading requires state-of-the-art trading platforms. By contrast, swing trading requires no more than a decent computer and conventional trading tools.
Key Takeaway: Day Trading vs Swing Trading Strategy
Day trading is a full-time job. It requires discipline, a “go it alone” attitude, self-control, and a willingness to take on serious risk. It is the appropriate choice for traders whose finances are strong.
Swing trading is far less stressful. For traders who want to dabble in the markets, swing trading is the appropriate choice.
Xtrade is an award-winning brokerage that offers CFD trading on stocks, indices, commodities, and currencies. Its cutting edge technology, available on both desktop and mobile devices, includes five digital trading platforms. These are accessible to traders across Europe, Asia, and the Pacific in over 40 languages. The company also offers a sophisticated trading education centre, real-time financial news, and innovative trading tools. Xtrade’s Global Ambassador is Cristiano Ronaldo of Real Madrid, who features on the company’s digital hub. Xtrade is regulated by CySEC, the EU’s Markets in Financial Instruments Directive, the Australian Securities and Investment Commission, and South Africa’s Financial Services Board.