If you are new to the world of trading, you have several options to choose from, such as swing trading, day trading, and long-term investments. With that said, you should know that compared to day trading and long-term investments, swing trading is essentially a medium-term strategy that enables you to hold your trading assets for a few to several days and weeks.
Read on to learn more.
What is Swing Trading
Let us explore what is swing trading and how it compares to the other two trading methods. You should know that there is no rush with swing trading; however, you will still be actively involved in trading, compared to long-term investments. You can capture medium-term or short-term profits with swing trading in your selected financial securities.
Compared to day trading, swing trading enables medium-term holding periods, which can range from several days, whereas day trading is often a very short-term holding, which is typically less than a single trading day. You should know that the profits you can reap with swing trading are typically higher than those of day trading.
What is Day Trading
Compared to swing trading, day trading involves a solid involvement in the market, as traders have to keep track of potential changes and movements until the market closes. The most important factor about day trading that you must keep in mind is that the trading positions are potentially opened and closed within the predefined timeframe, which is actually the same trading day.
The essential goal of day trading is to earn profits from frequent yet small price fluctuations, which is why day traders can make many trades throughout a typical trading day. However, compared to swing trading, day trading incorporates a higher risk, which is caused by short-term volatile price movements.
What is a Long-Term investment?
Now, compared to swing trading and day trading, long-term investment is essentially exactly what it sounds like. In simple words, long-term investing is about holding your trading assets for months and even years, as you do not need an immediate plan to sell your assets. Compared to day trading and swing trading, the primary goal of long-term investing is wealth accumulation over a long time by reaping profits from sustained yet significant market trends.
Swing Trading Offers Balance
Now that you know how swing trading is different from long-term investment and day trading, it is easy to understand how swing trading offers a balance between the high-frequency nature of day trading and the passive nature of long-term investment. With swing trading, you can hold the market trend for days or even weeks.
This aspect emphasizes that you can earn potential profits with less screen time compared to day trading, as you will be profiting from short-term fluctuations or trends. Besides, swing trading offers a proactive opportunity for gains compared to long-term investments that incorporate a buy-and-hold strategy. With that said, if you’re looking for active involvement but flexibility in the trading market, swing trading is the perfect option for you.
