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Day Trading vs. Swing Trading-Which Is Better?
Trading can be an exciting prospect when you’re just starting, but as you educate yourself, you realize the big fish in the pond know the moves you’ll be making as a small-time trader.
Many prominent hedge fund managers make plays to edge out small fish because they can endure taking a loss that you can’t. Another reason why the adage that the “rich get richer” rings true to this day. Here’s why swing trading may be the best strategy for making a profit as a small-time trader.
Day Trading is For Suckers
Anyone who has been in the trading market for a long time can tell you that brokerages love day traders. Why? They generate tons of fees on all the trades they make throughout the day.
Day trading is also one of the hardest things to do profitably for a small-time trader, just because substantial hedge funds can have a larger stop-loss buffer than you can as a small-time trader.
By using a swing trading strategy and technical analysis, you can spot directional moves in the market that will allow you to reach a position to make a profit and exit quickly.
You can exploit short-term moves in one direction created by prominent hedge fund managers who can’t afford to move in and out of the market in such a short.
Learn to Identify Swing Points
The market never stays still for long, resulting in swing points that indicate that an exchange may be moving toward an upward or downward trend. Being able to accurately read a candlestick chart and predict the price movements of a stock or option is one of the core skills of swing trading successfully.
Most of these strategies are referred to as buying the dips and selling on rallies, which are colloquial terms for buying and selling on a swing trade pattern. After all, swing charts are just a fancy way of saying “trends.” It’s all about eliminating the noise and novelty and looking for easy to spot patterns and capitalizing on them.
While not exactly rocket science, it is important to remember they are typically time-sensitive. So when you find a pattern of note, you need to react to it in a quick and effective manner.
Swing Traders Trade on their Schedule
One of the pitfalls of day trading is that you have to be available at critical points in the market you’re trading, whether that’s in the same time zone or not. Swing trades focus on price fluctuations rather than critical points in time, so a swing traders schedule is much more flexible than day trading.
Because most swing traders hold their trades for more than a day, you don’t need to worry about them as if you were trying to take profits from day trading. Most newbies end up hurting their chances of being successful when trading because they get over-confident and start selling too much.
Swing trading helps you avoid that by analyzing patterns and only capitalizing on them at specific price points. Stay true to the data and analytics and less on your gut feelings; this will serve you well in the long run.
Swing Trading Cryptocurrency is Profitable
Because the cryptocurrency market is available 24/7 day and night, it’s possible to both day trade and swing trade the cryptocurrency market. Because of its volatility, it can be harder to swing trade, but there are lots of opportunities for profit here.
Stay on top of the news while doing your due diligence on any cryptocurrency you are considering investing in, but remember that those swing points can be reliable indicators for when a market is about to see a rise no matter whether it’s stocks, equities, or even cryptocurrency.
When swing trading in the right fashion, it is less important which market you are playing within.
Swing Trading Lets You Play a Whole Sector
Because of the nature of swing trading, you can keep an eye on several stocks that are likely to see a rise on good news for their competitors. Diversification is essential in all aspects of stock trading, which includes active swing trading.
When you’re setting up the stocks you’re going to trade, try to keep each sector divided into three or four stocks that you feel will see a boost on the sector-wide news.
Keeping these trades in mind the next time news drops can help you master the technical analysis needed to become a good swing trader. Competing company’s charts won’t always look the same, but you should be able to spot the moment the news started affecting pricing.