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Difference Between Day Trader & Swing Trader

By Margin Hero | Uncategorized

Mar 29

To Swing or Not to Swing | What Type of Trader Are you?

So you're probably wondering what the difference between swing and day trading is, and what will make you more money.

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You have probably heard various traders telling you one strategy is better than the other. The fact is, there is no right or wrong approach to trading, in fact if you should swing or day trade really depends on your personality.

The major differences between the two styles

Swing trading is done on the daily time frame whereas day traders will start their day on the 4 hour chart and then zoom in and focus mainly on the 30 minute time frame. 

Day trading is more suitable for traders who have a low tolerance for, well to simply put, swings in their portfolio. Watching your portfolio drop a substantial sum one day to then be up ten fold the following week. 

A day trader will try to time the exact bottom, or as closely as possible, to mitigate risk so they can take a larger position partitive to their stop (never risking more than 1% of their account value)

A swing trader will have a much larger breath of room as to where they place their stop, and a seasoned swing trader can risk upwards to 3-5%. This is made possible due to the Risk to Reward ratio being much greater. 

A day trader will aim for a minimum R:R of 2; whereas, a swing trader aims for much higher profit targets (typically a R:R between 8-10.

What is a Scalper?

In addition to swing and day trading, there is also what is known as scalping. This is an in and out approach and something that Margin Hero only recommends to seasoned traders. 

Stops are not used when scalping because you never leave sight of your computer monitor. Scalpers watch the 3-5 minute charts and they collect profits 3-10 pips at a time.

A scalp trade is generally only open for 5-10 minutes. If a scalper isn't in profit within that time, the trade is closed and they patiently wait for the next setup. 

What makes the most money?

All trading styles have the potential to bring in an insane amount of profit. There are millionaire scalpers out in the world along with millionaire day traders and swing traders. 

There is no approach better than the other, what it comes down to is what you can stomach. So what kind of trader are you?

Take this quick quiz to find out:

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