Tweet
Here are some of the differences between Swing Trading Stocks and Day Trading. Day Trading is called 'Day Trading' for the obvious reason that it relates to a particular span of time and Swing Trading Stocks also represents a particular span of time. The span of time that Swing Trading represents is a longer period of time than day trading but a shorter period of time than someone who is 'investing' or in for the long term. For accounting and tax purposes, anything less than a year is considered 'short-term' trading. Anything over a year is considered 'long-term'.
Swing trading is a different 'style' of trading. It suits individuals that would rather be in a trade longer than a day trader would. Day traders very seldom let a trade stay in effect overnight. They will enter a position and exit that same position on the same day. Swing traders will leave their trade open for a couple of weeks to as long as several months.
Swing Trading Stocks Pros and Cons
As with all things, Swing Trading Stocks has its Good Side & Bad Side
Those that swing trade stocks tend to believe that they are in a less vulnerable position than the positions held by day traders. Although I can understand their thought process, I believe that they are both equally risky depending upon the experience, psychology and technical analysis technique employed by the trader. Everyone seems to think that long term investing is the safest bet but I beg to differ and I can use recent market activity as a prime example of this. In my opinion, the longer a trade is exposed to the markets, the more risk is evident. Investment brokerages have convinced the general public that investing is too complicated for the average guy and that he should leave his money with the brokerage for 'safe-keeping'.
The Pros of Swing Trading Stocks
Less time consuming than day trading. A trader is given more time in between trades to perform his/her analysis and could possibly choose better performers.
An initial poor entry has time to recover and return to a positive state dependent upon the direction the trader has chosen. Long (up) positions will often fair better in this respect than an initial Short (down) position.
Swing Traders need not be concerned with meeting the 'Pattern Day Trader' requirements.
Swing traders are given more data to analyze (time frame wise) than are day traders. A swing trader has more confidence in his/her trade because the current trend is supported by longer term historical data.
The Cons of Swing Trading Stocks (double edged swords from the Pros listed above)
Less time consuming than day trading. A trader is given more time in between trades to perform his/her analysis and could possibly choose better performers.
Con: A Swing Trader can also get bad information into the mix of their data analysis and choose a less profitable performing stock or a losing stock.
An initial poor entry has time to recover and return to a positive state dependent upon the direction the trader has chosen. Long (up) positions will often fair better in this respect than an initial Short (down) position.
Con: An initial poor entry also has time to keep moving against your trade.
A swing trader, day trader or any 'trader' must be aware at all times of what they are doing and what they could expect from any given trade. Here is a brief check list of very basic things to analyze before entering into a trade along with a little tip.
Check your confidence level on the following:
Psychology of the trade
Are you in control of your Fear, Greed, Patience and Desperation? Make sure your swing trading plan virtually eliminates any of these emotions else you could make a hasty decision. Also make sure that you are trading only disposable capital to eliminate desperate decision making.
Up (Long) or Down (Short)
Any trade will return you to the very basic question that you must answer before entering the trade. Do you think the stock is going to go
up or down? What analysis has brought you to this conclusion and do you have supporting evidence from outside sources for your answer? If you cannot give your answer some support, then your answer may be just a 'guess' and you might want to consider not entering the trade at all.
Confidence in your strategy
Are your technical indicators proven by YOU? Have you used them before by paper trading or with other trades? Have they worked for you? Simple Moving Averages and Exponential Moving Averages tend to be one of the most consistent technical indicators available.
Good Luck with those Trades!
Article Source: http://EzineArticles.com/1840206
Swing trading is a different 'style' of trading. It suits individuals that would rather be in a trade longer than a day trader would. Day traders very seldom let a trade stay in effect overnight. They will enter a position and exit that same position on the same day. Swing traders will leave their trade open for a couple of weeks to as long as several months.
Swing Trading Stocks Pros and Cons
As with all things, Swing Trading Stocks has its Good Side & Bad Side
Those that swing trade stocks tend to believe that they are in a less vulnerable position than the positions held by day traders. Although I can understand their thought process, I believe that they are both equally risky depending upon the experience, psychology and technical analysis technique employed by the trader. Everyone seems to think that long term investing is the safest bet but I beg to differ and I can use recent market activity as a prime example of this. In my opinion, the longer a trade is exposed to the markets, the more risk is evident. Investment brokerages have convinced the general public that investing is too complicated for the average guy and that he should leave his money with the brokerage for 'safe-keeping'.
The Pros of Swing Trading Stocks
Less time consuming than day trading. A trader is given more time in between trades to perform his/her analysis and could possibly choose better performers.
An initial poor entry has time to recover and return to a positive state dependent upon the direction the trader has chosen. Long (up) positions will often fair better in this respect than an initial Short (down) position.
Swing Traders need not be concerned with meeting the 'Pattern Day Trader' requirements.
Swing traders are given more data to analyze (time frame wise) than are day traders. A swing trader has more confidence in his/her trade because the current trend is supported by longer term historical data.
The Cons of Swing Trading Stocks (double edged swords from the Pros listed above)
Less time consuming than day trading. A trader is given more time in between trades to perform his/her analysis and could possibly choose better performers.
Con: A Swing Trader can also get bad information into the mix of their data analysis and choose a less profitable performing stock or a losing stock.
An initial poor entry has time to recover and return to a positive state dependent upon the direction the trader has chosen. Long (up) positions will often fair better in this respect than an initial Short (down) position.
Con: An initial poor entry also has time to keep moving against your trade.
A swing trader, day trader or any 'trader' must be aware at all times of what they are doing and what they could expect from any given trade. Here is a brief check list of very basic things to analyze before entering into a trade along with a little tip.
Check your confidence level on the following:
Psychology of the trade
Are you in control of your Fear, Greed, Patience and Desperation? Make sure your swing trading plan virtually eliminates any of these emotions else you could make a hasty decision. Also make sure that you are trading only disposable capital to eliminate desperate decision making.
Up (Long) or Down (Short)
Any trade will return you to the very basic question that you must answer before entering the trade. Do you think the stock is going to go
up or down? What analysis has brought you to this conclusion and do you have supporting evidence from outside sources for your answer? If you cannot give your answer some support, then your answer may be just a 'guess' and you might want to consider not entering the trade at all.
Confidence in your strategy
Are your technical indicators proven by YOU? Have you used them before by paper trading or with other trades? Have they worked for you? Simple Moving Averages and Exponential Moving Averages tend to be one of the most consistent technical indicators available.
Good Luck with those Trades!
Article Source: http://EzineArticles.com/1840206
