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Whether you want to establish yourself in the forex or stock market, you must know basic trading strategies. These are ways to analyze the price action movement based on certain fundamental attributes and ensure maximum profits and lowered risks. However, if you do not understand the trading concepts properly, the risks will increase, and you may trade in loss.
Published on 19 October 2022
The two major trading strategies are day trading and swing trading. Most traders opt for day trading since the position's opening, and closing will happen on the same day. But this does not mean the swing trading method is completely out-ruled. Both day and swing trading concepts are synonymously used to ensure maximum gains. If you are an amateur, start understanding the differences between these two strategies before you implement them.
Keeping this in mind, we have drawn a parallel study between swing and day trading. This will give you the fundamental clarification needed to excel as a trader.
As the name suggests, day trading is a strategy where the trader buys and sells assets within the same day. In other words, the maximum time duration between the opening and closing is 24 hours. Usually, in this case, traders opt for short positions because, in long positions, day trading cannot yield maximum profits. Plus, the risks are also higher with the long positions in day trading.
Swing trading, on the other hand, aims toward short to medium gains over days. Here, the trader opens the position by buying and holding some assets. With the help of technical analysis, they determine the expected reversal in the trend and choose the ideal sell point to make maximum profit.
Although the profit margin is more for swing traders than for day traders, they are exposed to the risks of gaps where the price suddenly changes when the market is closed or not operative.
Iii. The risks associated with day trading are lesser in number. Most traders profit from day trading, regardless of when they close their positions.
Iv. It is easier to track the uptrend and downtrend in day trading because you won't be exposed to the gaps between two price movements. As a result, you will be aware of the price action movement of every instant.
iii. You can easily use different technical and analytical methods to understand the price action movement and speculate future trends.
Now that you know the fundamentals of day trading and swing trading, it will be easier to decide which one you want to go with. While doing so, keep your expertise in mind along with the scope and provisions. Also, it would help if you considered the expected profit margin, the risks you can sustain without suffering any major loss, and the past market price action movements.
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