Which is More Profitable - Swing Trading or Day Trading?
- Thread starter mazotrade
- Start date
After all the more complicated questions I answered to before in the last days, finally this is an easy one. Now before answering I have to make some suppositions:
1. Capital is not a problem
2. In both cases you are a winner and you know exactly when to get in when to get out, how to do money management etc.
Given the above hypothetical conditions, it is obvious that the daytrader will make MUCH more than the swing trader. Image the ideal situation where the 2 traders could both make continously "ideal trades". (getting in at the bootom, getting out at the top).
The daytrader would benefit from EVERY move during the day , while the swing trader only profits from up/down movements over a couple of days. The difference is ENORMOUS. Just run a hypothetical backtest on any stock over a couple of days, and you'll see the SIGNIFICANT difference.
Unfortunately, I have to admit, that this "ideal" situation, is hard to come by, for both type of traders. That's why the more realistic answer is: The better trader will make more....
FWIW
TFD
1. Capital is not a problem
2. In both cases you are a winner and you know exactly when to get in when to get out, how to do money management etc.
Given the above hypothetical conditions, it is obvious that the daytrader will make MUCH more than the swing trader. Image the ideal situation where the 2 traders could both make continously "ideal trades". (getting in at the bootom, getting out at the top).
The daytrader would benefit from EVERY move during the day , while the swing trader only profits from up/down movements over a couple of days. The difference is ENORMOUS. Just run a hypothetical backtest on any stock over a couple of days, and you'll see the SIGNIFICANT difference.
Unfortunately, I have to admit, that this "ideal" situation, is hard to come by, for both type of traders. That's why the more realistic answer is: The better trader will make more....
FWIW
TFD
surprised many think there is more money in daytrading.
hedge funds make money swing and long term trading. could a day trader ever approach anything near what a swing trading hedge fund? it is just not possible. a good hedge fund can make a few hundred million a year swing trading. there is no way a day trader could ever touch this. what are you people talking about.
hedge funds make money swing and long term trading. could a day trader ever approach anything near what a swing trading hedge fund? it is just not possible. a good hedge fund can make a few hundred million a year swing trading. there is no way a day trader could ever touch this. what are you people talking about.
I concur.
I personally day trade. I like to be in all cash by lunch time which I usually follow.
However, on certain market days if it's rallying or selling off. I'm holding the short or long ETF position till almost closing bell.
You're confusing the practicality of deploying large capital pools with longer timeframe trading being more profitable. You're also confusing total dollars with return on capital and significant differences in scale. If a hedge fund made $200 million this year on its $200 million invested capital, why would that be "better" than an individual trader making $250K on their $250K in capital?
If you're managing a megadollar fund, it's just not practical to make all of your capital work for you if you had to move it in and out every day. Has nothing to do with whether multi-day is "better" (again, some people continue to improperly use the "daytrading" and "swing trading" terms when they're typically referring to trade timeframe, not trading methods - swing trading is a method that can be used on intraday and multi-day timeframes, daytrading is ONLY about being flat at the end of the day and implies nothing more than intraday trading but trade holding periods in daytrading can range from seconds to all day depending on the specific trading methods involved).
And don't confuse the way hedge funds trade (and the much larger leverage they have) with how most individual traders trade. Whether a hedge fund is profitable has a whole lot less to do with their position hold period than it does the kinds of positions they're putting on (e.g., arb, inter-market relationships, conservative vs. aggressive, etc.).
The issue is moot for the average individual trader. It becomes a function of individual trader's ability, preference, risk tolerance, etc. as to what timeframe and methods they choose to use.
There is no "better" timeframe - it's solely a function of what works best for the particular trader.
There are a lot of daytraders making bundles more than many multi-day traders. There are also a lot of multi-day traders making more than many daytraders. It's not a function of which timeframe is more profitable - only which traders are more profitable. And there are also a lot of bust outs in both categories.
It would be stupid to tell a daytrader who's making $250K/yr (with no overnight worries of a crisis) that he should change to multi-day trading. Similarly, it would be stupid to tell the successful multi-day trader (who perhaps prefers lower trading intensity and frequency in exchange for overnight risk) that they should switch to daytrading.
