To be a successful trader you need to find a “Trading Style” which suits you “THE BEST” , in terms of risk appetite, stress,money management. A trader who is not comfortable with his trading style or has not found trading style are the one who commits the trading sins and blow of their trading account.
Trading can be broadly classifies into:
- Day trading
- Swing trading or Positional Trading.
Let’s define these two terms:
- Day Trading is also known as ‘Intraday’. It means opening and closing a position within the same trading day. Traders who are interested in scalping,quicker and smaller profits and trading on leverage and who can make multiple trades per day work on this strategy.
- Swing Trading means that you are trying to take advantage of larger price swings in the markets. Traders will carry positions for few days to 2-3 weeks. Trades can be taken based on Gann/Harmonics/Price Action trading methodology to find swing trades.
So which trading approach is better – Swing trading or day trading? Traders can look to either day trade or swing trade, the benefits and drawbacks are different with each. Understanding the differences in risk, rules and goals is important when deciding how to trade on a particular trading style.
Day Trading Advantage:
- Risk is in Control if you follow “ Stoploss“
- Profit is small.
- Traders can use the Over leverage upto 10-20 times provided by brokers
- It is presumed you can make fast money, from my experience opposite holds true
- Gives you no tension of carrying overnight positions
- Allows you to always be actively participating in the market
- Positions are closed by end of trading day so overnight unexpected news will not affect your trading account
Day Trading Disadvantage:
- Overhead cost are more, STT , Turnover tax commissions eat away most of profits.
- You can lose money faster much much faster if you are not knowing the traits of the game.
- Time consuming – very difficult to trade properly if you have a full-time job.
- Success Ratio is very less, As per stats only 5% traders become successful in long run.
- Extremely Risky! Traders can lose a substantial amount of money in a very short period of time.
- Fast pace & necessary concentration can make day trading very stressful.
- Money management,Discipline and a profitable system are a lot more important when day trading.
- Even a small mistake can result in a huge loss.
Swing Trading Advantage:
- Swing trading gives you time to allow the move you’re anticipating to actually occur.
- It helps in Managing Stop loss and Profit target.
- Success Rate is quiet high when compared to Day trading as you give time to your trade.
- Not necessary to “Baby Sit” your trades, less time involved in active trading.
- Can be worked around a regular job – a couple of hours per day should suffice.
- Less stressful than intraday trading.
Swing Trading Disadvantage:
- Trader will find difficult to learn and become profitable in initial phase of trading career.
- More time is required in analyzing charts and preparing trading plan.
- Trader must review his open trading options once in a day.
- Trader need to fight “Emotional Attachment” to the trade.
- Most of trader will keep searching for tops and bottoms or reversal for taking the trades and mostly go wrong in initial phase of trading career.
- It is not uncommon to exit on a retrace or trend change only to have the market immediately change back and head in the original direction.
- No Control over overnight positions.
- Traders will not be able to use leverage provided by Brokers ( Professional traders will consider this as an advantage.)
Which style appeals to you? Which are you now actively trading?
Sir, which time frame to be follow in chart (I.e 5m, 15m. 1h) for intra day trading & position trading….
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nice article with all the points covered for one to decide to trade
either way
Sir,
Isn’t it possible to do both, at the same time?
For example, I took the intraday trade as per intraday strategy and went long in NF at 7100 with two lots.Booked the first lot. Let the second lot trail. Once the positional system gave a long signal at 7160, I took another lot on intraday basis and during the last half hour converted this to carry forward. The other open lot was closed using auto square off.
On the subsequent days, I let the positional trade open with the TSL of the positional system. During this time I also took both short and long trades based on intraday system. So on days that the positional wasn’t making money, I still made money on intraday basis or at least my losses were small.
Just wanted to check if this is acceptable as I have just had two trades on the positional system one of which is still open.
Thats Perfectly alright if you have clarity on the system you are following.