Why Swing Trading is Better Than Day Trading

Why Swing Trading is Better Than Day Trading

Day Trading Experiences

A few years ago, I went through a whole phase where I was mostly day trading, buying and selling stocks in one day, and before the closing bell.

I’ll admit… It was pretty stressful.


Because in order to successfully day trade and reach $100 or more profit per trade, you have to risk thousands of dollars.

Yes, it can be done if you formulate your own system through trial and error and studying the technical charts to see which stocks are volatile enough that you can take advantage of those wide swings in stock prices.

The stress is when a stock goes south and suddenly into the red. Yes, it will happen to every day trader out there, and that’s why it’s important to keep track of your success rate, take down notesm, maybe even keep a day trading diary.

You can set stop loss orders to minimize the losses, but think about it, that is already admitting defeat… and many times I would then swing trade the stock and hold until it becomes profitable again. Sometimes that took a day or two, sometimes it took a month or more, and once-in-a-great-while, you have to cut your losses.

And, I’ve gotten dinged by my brokerage a few times for using money that wasn’t settled in 2-3 business days after previous stocks were sold. This is called a Good Faith Violation, and 3 of them in a given year will put restrictions on your trading. You have to make sure you have a LOT of cash to cover settled stocks. Or you have to wait until your sold stocks get settled.

Swing Trading Experiences

With Swing Trading you are buying a stock and holding it overnight with the intention to profit and sell the sold in a few days or weeks. Selling a stock after more than several weeks to months is called Position Trading, but we’ll get to that in another post.

Swing Trading is easier on the mind and better on the stress levels, simply because you are risking a much smaller amount of money in order to profit.

With Day Trading, you could be in and out of a stock in a few minutes. But with Swing Trading, as long as you have a stock that is outperforming in the 6 month to 1 year charts, it’s easy to buy at a low and sell high, and the longer time frame makes for an easier entry point and exit point. And, if you so choose and the stock is performing well, you can decide to hold long term.

Of course, Swing Trading requires more patience, as this style of trading is slower compare to the fast and furious pace of Day Trading.

Swing Trading is better because you have the option to hold long term, whereas in Day Trading you could be trading a stock that doesn’t have a proven track record, but has enough volatility to take advantage of those wide swings.

With Swing Trading you can select outperforming stocks that you know will rise in the future because of it’s fundamentals and it’s performance history. And, it’s much easier to manage your cash and portfolio to avoid Good Faith Violations.

Keep in mind that tax-wise, long term holding is the best as you will be dinged with higher taxes if you buy and sell stocks within a year’s time. Unless, you buy and sell stocks within an IRA or Roth IRA account.

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Portfolio Manager & Musician

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