20 July 2020

Photo by Austin Distel on Unsplash

It is crucial to establish what type of trading strategy will work best for you before diving in to the crypto market. Today we are going to show you two of the most popular methods for trading. This will depend on your lifestyle and abilities.

These methods are Swing Trading and Day Trading.

What is a Trader?

A trader is a person that buys and sells financial instruments. This includes stocks, bonds, commodities, cryptocurrency, etc. 

These people come out with some sort of strategy to be at the top of the market. The two most popular ones are swing trading and day trading.

What is a Swing Trader?

Swing traders would study the market for a while, seeing the ups and downs in it. After that, they buy a financial instrument and keep it for a couple of days, even weeks.

They always keep up with the market and other traders to start selling. They usually do not find trading to be their actual job, it is almost like some type of paid hobby. These are the more relaxed, passive, and less-involved traders.

What is a Day Trader?

Day traders, as the name says, make many trades daily. They study the market in a more focused way, as they use price movements within the day to determine their trades. Day Traders examine stock prices and then buy and sell at a fast pace to earn small profits every time. 

According to the Financial Industry Regulatory Authority, traders taking four to five trades in five days are Day Traders. They look to profit from price discrepancies. Unlike swing traders, day traders make trading their full-time job. These traders are incredibly involved and are always watching the market, trading whenever there are any small movements in price to ensure a profitable move.

Day Trading vs. Swing Trading

The main difference between these two trading methods it’s that you don’t need a lot of money to start swing trading, unlike day trading. According to FINRA, you will need $25,000 to start Day Trading. You would ideally need to keep that same amount of money at the end of the day to use the next business day.

Another important aspect is to know how much time you plan on investing and making trades. Being a Swing Trader does not require as much time as Day Trading. As mentioned above, Swing Traders trade every once in a while. Day Traders do it every single day, many times a day.

Am I a Swing Trader or a Day Trader?

You don’t need four degrees and a Ph.D. to become a trader. It depends on your way of seeing it and what kind of strategy you are planning to follow. Keep in mind that, between Swing Trading and Day Trading, the first one is not as time-consuming. Yet, you are not probably going to see results as fast as Day Trading might give you. 

The good thing is that you do not need a lot of money to start Swing Trading. Once you see results, it is going to be “safe money”. Day trading can be a little bit volatile; it requires you to be fast at entering and exiting the market. You can earn small profits fast, but it is also riskier and requires a better understanding of the market and its movements.

Conclusion

The decision depends on your lifestyle and personal preference. If you want to spend more time investing and trading and you want to see results fast, Day Trading is perfect for you. But beware because it takes so much time, you may have to give up other activities to make some room for it.

If you want to get into trading, but you still want to keep it simple, doing it once in a while, then Swing Trading is the method you are looking for. You can also make quick money in Swing Trading as well. For instance, I bought some shares in a company after reading up on it. A few days later, news dropped that it was being bought out by a massive company, and its share price doubled overnight. These things do happen in Swing Trading, it just requires a little bit of luck.

In the end, it all depends on what you want to get out of investing.

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Edmund McCormack
Tech industry veteran and blockchain technology investor. Simplifying cryptocurrency for almost a decade.

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