Tuesday, September 26, 2006

Swing Trading vs. Day Trading

On a functional level, Swing Trading is different from Day Trading. Day Traders usually do not hold any positions overnight, whereas Swing Traders typically hold positions anywhere from 2 days to 2 weeks (sometimes even more). Day Traders trade on an intra-day time frame. In other words, they rely mainly on a 2/5/10/15/30-minute chart, whereas Swing Traders trade on a daily time frame, and rely more on an hourly/daily/weekly chart.

However, is the general approach to Swing Trading applicable to Day Trading, and vice versa? In other words, can a successful Swing Trader become a successful Day Trader (without learning/unlearning certain skills/tools/mindset) and vice versa? I've read a few blogs where the person used to be a swing Trader, but decided to make the jump to become a day trader. Based on what I've read, the learning curve in making the transition from a Swing Trader to a Day trader does not seem to be steep. However, I haven't come across anyone who talks about making the transition from day trader to being a swing Trader. So at least in that sense, one difference would be that making the transition from being a Swing Trader to being a day trader is seen as an evolution, a "next step" if you will, but going the other way is never heard of nor talked about.

I've also noticed in a couple of the blogs that I've read, the day trader is looking for a certain setup consisting of narrow range candlesticks. Well, for the Swing Trader, that kind of setup does not occur often on the daily chart, and even less so on the weekly (unless you are talking about a company that has just been bought out). So, to generalize, in my opinion, the patterns and setups that a day trader looks for may not be the ideal patterns and setups for Swing Trading.

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