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Day trading vs. swing trading


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Day trading vs. swing trading

  #11 (permalink)
 DoctorDirty 
Fukuoka-shi, Fukuoka-ken, Japan
 
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deaddog View Post
Keeping in mind that I trade stocks not futures. My main source of income is from trading and investing.

Went from day trading to swing trading for the following reasons.

1) Time spent at the computer. I make as much or more money in less time
2) Less stress; I make my plan for the next day while the market is closed.
3) Less noise; Longer time frame makes it easier to determine potential S&R; stops and targets are usually further away from the entry.
4) I’m not tempted to overtrade. My exits are set and I’m doing other things while the trade is in progress.
5) Commission and trading costs are less.
6) Easier to maintain discipline; Trades are set without the emotion of an active market affecting my thinking.
7) Swing trading fits my personality.

I'm still new to trading and I've decided to try swing trading for most of the reasons mentioned above. However, it's hard to get a large enough sample size of your own trades to know if you're profitable when swing trading.

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  #12 (permalink)
MFX1
Amsterdam
 
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dbarno View Post
Actual trade. Shorted 4 6e thursday on day trade. Liked what I saw and rolled all 4 into friday. Bought 2 to lock in profit on friday. Rolled the other 2 into the weekend. Still short 2 runners.

Also have two accounts. Use one for day trading and another for swing trades. Keep both well funded if you have to flip the accounts between time frames. Lots of ways to use this idea.

I was thinking: isn't it hard to anticipate which of your trades will become a swing trade, and which ones will be a day trade? I mean, you can't just move trades over from one account to another...?

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  #13 (permalink)
 
dbarno's Avatar
 dbarno 
Madison, Wi
 
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I really don't know if I can do that or not. Seems like something else to go wrong. Will look into it. Probably would vary by broker.

Prefer to swing trade. Sometimes both accounts get tied up on swing trades. Gives me flexibility. I enjoy day trading, but the real money is in swing/position trading, IMHO.

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  #14 (permalink)
Pedro40
Pittsburgh, Pennsylvania
 
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DoctorDirty View Post
it's hard to get a large enough sample size of your own trades to know if you're profitable when swing trading.

Get old data and backtest it...

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  #15 (permalink)
 e4williams 
Amarillo Texas/USA
 
Posts: 63 since Dec 2014


Pedro40 View Post
Part of my answer in the original CL thread was, it also depends on the market. In a dull, flat market a daytrader is probably able to extract some profits from the market while the swingtrader is just waiting for his exits to be hit. Also if it is a very volatile market the swingtrader might be able to take advantage of it only once between 2 price level moves while the daytrader maybe 2-5 times. So there can be advantages to daytrading, depending on market conditions. But a daytrader probably spends way more on commissions.

The biggest advantage of swing trading is the less need to monitor the markets because of the wider exits from the original price.

Now to your points that I numbered:

1. You probably don't have to, depending on your definition of swing. It is just going to be a lots of waiting time while you wait either for the set up or for the position to play out. So you will have lots of extra time...

2. Why don't you try both at the same time, so you will get your answer? Have 2 accounts set up and treat them differently? The swing account should have just a few trades with wider stops and targets, and use bigger timeframes on your charts. But as I said above, at different times you might get different results about what is the more efficient/profitable method...

3. In my experience yes, but not everyone is the same, so whatever suits you. And you can actually use both, there is no law against it...

Thanks, what I am finding as I dig into some of these day trading strategies are that there is a lot that I can apply directly to swing trading. I see huge advantages to using the opening range breakout for determining an entry point in a swing trade. Great fun learning all this stuff.

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  #16 (permalink)
 e4williams 
Amarillo Texas/USA
 
Posts: 63 since Dec 2014


teee View Post
I'm not sure if it's just me, but it sounds to me that you are not ready to embrace the advantages/disadvantages of both swing trading and day trading but wish to convince others swing trading is the superior method because you had already developed such strong belief yourself. Personally I think this can be dangerous. I believe keeping an open mind is very important in trading.


You can trade successfully with different product, different markets, different strategies and of course different time-frame too. What's important is to find the right package that suits ones' internal personalities and external circumstances.
Claiming swing trading is more superior than day trading sounds just like claiming trading S&P will be more profitable than trading 10 yr notes or trading the Canadian Market will be more profitable than trading in Australian Market (maybe US market is the most popular market for traders, but chances are profitable opportunities exists in any market).

Let's say somehow we could collect data from all traders in this world and found that indeed swing trading traders do have better performance compared to day traders over all matrix including return,risk, psychological state, partner appearance and whatever measurements, it does not mean the future will remain the same. (If anything this study would create more opportunities for day trading.) Unless you can prove not a single person can be profitable day trading and this is clearly not the case.

Let's say you are actually right and no one is day trading any more because its not profitable and they decided to stop "playing around with the numbers", good luck getting your swing trade orders filled.

Be grateful that people trade differently and welcome to the market =)

I will keep an open mind. And I am learning a lot by digging into day trading strategies.

My day trading abilities are not good enough to do this myself. I was just wondering if anyone with good day trading abilities had tried comparing a short 5 day swing trade, for example to day trading each day within that same swing trade and would their day trading abilities be able to make a better profit? Had any one made that comparison for themselves.

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  #17 (permalink)
 Underexposed 
Calgary Alberta/Canada
 
Posts: 934 since Feb 2014


e4williams View Post
I will keep an open mind. And I am learning a lot by digging into day trading strategies.

My day trading abilities are not good enough to do this myself. I was just wondering if anyone with good day trading abilities had tried comparing a short 5 day swing trade, for example to day trading each day within that same swing trade and would their day trading abilities be able to make a better profit? Had any one made that comparison for themselves.

let us say that the company you were following from day 1 to day 5 had an increase in price overall.

Scenario #1 no dips and dives in the price

You would do worse day-trading... why?... daytrading you would have 5 times as much cost in trading fees at least... could even be more if you made more than one day trade on the stock in a day.

Also let us say you day 1 the stock went from $1.00 to $1.05 (5% gain...nice) so you sell at day's end... now there is a start to day 2 but you cannot buy back in at $1.05 at the beginning... you are perhaps chasing it at $1.06... you lost a step and bit of profit doing so.... this could continue to happen each new day.

So buying more expensive at the start of the day and more fees eat into your overall return compared to the swing trader whose fees are a simple in/out fee.

Scenario #2 the stock is quite volatile moving up overall in waves.

As long as the increased number of transaction fees were worth it I suppose that you could possibly come out ahead as a daytrader... it would depend on the magnitude of those movements overcoming the increased transaction fees.

You could also say... well the daytrader would bail out earlier if the trade turned sour compared to the swing trader.

that is not necessarily so.... as a swing trader occasionally myself (though my swings last weeks usually) I can, through my charts, judge when a swing trade is exhausted and leave taking my profit. I do not say that I am in for 1 week(day), 2 weeks(days), 5 weeks(days) or set a target of such and such % profit then out. Such rigid criteria is a recipe for profit lessening or loss all together IMHO.

If you have the TA tools to judge when a run is over a swing trader has ample warning to leave a swing trade with a profit.


I am not saying that Day traders don't make money... but I doubt that successful daytraders chase a rising stock price with multiple transactions... the increased fees would kill most of the profit and record keeping for these multiple transactions for tax purposes would be daunting .... for me anyway

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  #18 (permalink)
 
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 Seahn 
New York, New Jersey/USA
 
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Although this is an interesting topic, in the end its a moot point. For every argument for one method there is a counter argument for the other method. This is the same as scalping vs intraday swing trading which has be beaten to death here without any resolution, because there is no resolution its personal preferences and financial limitations.

For example, people say day trading takes a lot of screen time.... I day trade for my primary source of income, I normally start at 9:30AM and I usually meet my daily target by noon (unless I get myself into a pickle then have to spend the rest of the day getting myself out of it). When I am done I leave and enjoy the rest of the day without having to worry about open positions.

It all boils down to the goals, preferences and talents of the individual trader and the trader must find their way by themselves.

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  #19 (permalink)
iBurger
Liechtenstein
 
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Seahn View Post
Although this is an interesting topic, in the end its a mood point. For every argument for one method there is a counter argument for the other method. This is the same as scalping vs intraday swing trading which has be beaten to death here without any resolution, because there is no resolution its personal preferences and financial limitations.

For example, people say day trading takes a lot of screen time.... I day trade for my primary source of income, I normally start at 9:30AM and I usually meet my daily target by noon (unless I get myself into a pickle then have to spend the rest of the day getting myself out of it). When I am done I leave and enjoy the rest of the day without having to worry about open positions.

It all boils down to the goals, preferences and talents of the individual trader and the trader must find their way by themselves.

Maybe one additional benefit is, that you can day trade by focusing on technicals alone. (I noticed, I can). As a swing trader, imho, you need to keep up with fundamentals more and focus on the market sentiment so that you are not on wrong side of the trade.

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  #20 (permalink)
 
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 deaddog 
Prince George BC Canada
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MFX1 View Post
I was thinking: isn't it hard to anticipate which of your trades will become a swing trade, and which ones will be a day trade? I mean, you can't just move trades over from one account to another...?

I always start with a swing trade. The only way a trade becomes a day trade is if I hit my stop.

Be careful not to turn a day trade into a swing trade or a swing trade into a long term trade because you don't want to take a loss.

"The days when I keep my gratitude higher than my expectations, I have really good days" RW Hubbard
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Last Updated on November 13, 2015


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