Knowledge is a wise investment.

What is day trading?

Day trading is the practice of buying and selling financial instruments within the course of a day. A day trader typically starts trading when the market opens and finishes when the market closes. The idea is to speculate on small price movements.

• Day trading involves opening and and closing a position within the same market session.
• Day traders speculate on an asset’s short-term price fluctuations.
• Day trading is highly risky, so traders should do their own research, remember that prices can go down as well as up, and should never trade with more money than they can afford to lose.

Things to watch out for when day trading

The are a few mistakes traders could avoid when day trading

• Not doing their own research: A trader who does not do their own research is at risk of losing their money because they are not as well informed as they could be.
• Trading illiquid assets: If a trader’s assets are not liquid enough, then they may not be able to sell them.
• Not controlling their emotions: Traders who keep their emotions in check may be more likely to make rational decisions than those who let their hearts rule their heads.

Swing trading explained

Swing trading refers to the medium-term trading strategy that involves taking a position in a security for a period of a few days to a few weeks, aiming to profit from price swings. Swing trading strategies employ fundamental or technical analysis to determine whether a particular security could go up or down in price in the near future.

Swing trading explained

Swing trading refers to the medium-term trading strategy that involves taking a position in a security for a period of a few days to a few weeks, aiming to profit from price swings. Swing trading strategies employ fundamental or technical analysis to determine whether a particular security could go up or down in price in the near future.

Highlight

• Swing trading is a trading strategy that involves taking trades over a period of days or weeks, in an attempt to profit from expected price swings in the market.
• Swing traders use fundamental and technical analysis to identify potential trading opportunities.
• One of the key differences between swing trading and day trading is time. Swing trading tends to be more medium-term with positions kept open for days or weeks, while day trading positions are opened and closed on the same day.

Swing trading strategies and techniques

How do you swing trade? There are several different swing trading strategies often implemented by traders. Below are some of the most popular.

Breakout

A breakout technique is an approach where a trader takes a position on the early side of the uptrend, looking for a market or stock that is most likely to ‘break out’. The trader gets into the trade as soon as they see the desired level of volatility and movement of a stock that breaks a key point of stock’s support or resistance.

A breakdown strategy is the opposite of a breakout. The market price goes lower than a defined support level and the chart points toward lower prices. Then, traders monitor the same fundamentals as with breakouts.

This swing trading technique uses price-changing momentum when its growth or fall slows down before having a complete reversal.

A concept that is quite similar to reversal. Retracement is applied when the price reverses within a larger trend, but not to its high or for any length of time. A stock temporarily retraces to an earlier price point and then continues to move in the same direction later.

Note

Day trading is considered one of the most speculative strategies as traders attempt to profit from very short-term movements in the stock market, selling at a predetermined price to hedge against the risk of any counter moves that might happen during out-of-hours trade. Each trading strategy has its advantages and disadvantages. On a surface level, day trading could have a higher chance for gains as day traders would make a higher number of trades in the same time frame as swing traders. However, in actuality, factors such as the strength of a trader’s strategy, their knowledge of the market and the strength of their research may have a much greater effect on the gains or losses they make.