DAY TRADING AND SWING TRADING - THE CURRENCY MARKET

Jan 15, 2020
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Some traders are still awfully confused between day trading and swing trading in the currency market. The financial market is increasingly developing, appearing many new forms of financial transactions. At the same time, the internet speed is increasing rapidly, leading to the growth of the number of better online traders. Especially in the Forex market, there are many different forex trading strategies, typically Swing and Day Trading.

Depending on the capital, trading strategy or personality characteristics of each trader, we can shape the different trading styles on this Forex market. Swing or Day Trading is one of the countless Forex trading styles on the market.

In case you might not know:

Day Trading

Day trading and swing trading in the currency market

When trading Swing, we use the medium-term time frame to analyze the chart. For Day Trading, we use lower time frames. You can understand something like that.

In this article, we want to clarify the difference between Swing and Day trading. More specifically, we will analyze these two schools to help Trader understand the advantages and disadvantages of each, this helps Trader know which trading methods are suitable for themselves.

The school of business affects the actual profit results. So you should consider choosing your direction accordingly.

Day Trading Strategy

This means that all Trader orders must close before the end of the trading day. This school has more advantages with Swing. For example, day trading is when you come to the weekend you will feel much more comfortable, because we do not know what happened on Saturday and Sunday in the world. So, if we keep the orders to the new week, it is very dangerous. You can sleep soundly regardless of whether the world collapses or not.

 Expert's view on Day trading strategy 

For example, unexpected events such as political conflicts, terrorism, elections, protests, negative economic data, ... greatly influence the financial market in general, and the Forex market in particular. Day Trading also doesn't need to worry about what the opening price on Monday will be like. Ideally, if Trader follows the Day Trading style, please cut off the order before the end of the 6th trading day.

Depending on the monetary policy of each country or region, overnight orders will incur different fees. If Trader Day Trading is a long-standing company, this cost savings is also significant.

Trading on the day, Trader should use low time frames like the 5-minute chart, how can Trader clearly see fluctuations in that day?

Using news analytics strategy or technical analysis?

Every time you believe it, you can see the price jerk in a split second, which requires you to be informed at a fast pace. But for small, individual Traders like us, it is difficult to capture information quickly. Large trading organizations around the world equip them with huge toys, they have supercomputer systems that capture information at 1/1000 second.

If traders are long-term traders, they will notice on the Forexfactory.com site to follow the news when they hear the news to know how the figures or blue / red are very late.

Most of Day Trading Traders are Scalping, so technical analysis will be the best solution for you. Traders sit calmly and wait for the price to move to a predetermined range, then you will consider whether or not to enter the order. Regardless of the news, if the price goes according to the plans in mind, then Trader will just fight.

Swing trading strategy

For a Swing Trader, any positive or negative developments are only temporary. Swing Trader doesn't care about the immediate result, if the Trader has a long-term vision, the immediate fluctuations are seen as small adjustments. And this school is suitable for traders who have little time to follow the market, it's not like Day Trading forces Traders to monitor the price fluctuations continuously.

The average time to hold a Swing Trader is from several hours to several weeks, or even months. Holding the order for so long, the Traders are forced to pay a large swap (Swap) if buying / selling pairs that do not enjoy positive spread.

More details on Swing Trading strategy

For example: Currently I am writing this article, the Sell command for XAU / USD will enjoy positive Swap, the longer I raise it, the more I receive, about 3-4 $ / lot / day. As for Buying, it would cost me $ 4-5 / lot / day for the Swap fee.

Swing trader has a more general perspective than Day Trader. Because Swing Trader will have to analyze on a large time frame (hours, days or months) to have an overview of the entire market from the distant past to the present time.

Swing traders, after analyzing for a large time frame, may start looking for entry points at a smaller time frame, which will help optimize the profits for that Trader.

swing trading

The soul of Swing Trading is that Trader must be knowledgeable about fundamental analysis. Economic news, banking policies, socio-political events, ... these things will help Trader have a long-term vision of any asset or market.