Which one is suitable for you? let’s first take a look at each style. The following is based on the assumption that you follow the idiom “cut losers and ride winners”
Day Trading
Pros:
- very little risk due to not holding postions overnight
- easy and quick entries and exits
- no need to worry about long term general trends
Cons:
- much smaller profits than swing trading
- A very accurate system is required
- not good for people who have a day job.
Pros 1 and 2 are very easy to understand. For pro 3, I believe we do not need to worry about the long term trend of a position that you are day trading because we try to capture small moves for a day position. If a stock is in a long term up-trend, the probability that it will retrace at a certain point it is over 99% since all stocks zig and zag. When it shows any signs of zagging, you can fade it intra-day. It is the same when a stock is in a downtrend.
Swing Trading
Pros:
- bigger profits
- no need for a very accurate system
- suitable for everyone, lawyers, doctors, policemen, you, me and Dupree
Cons:
- More risk due to holding positions overnight
- A lot of your positions might die since they require much bigger moves
Pro 1 is true since I always believe that your risk and reward is mathmatically proportional. If you take a bigger risk, you MIGHT have a bigger reward.
Pro 2. I explained in this post (Probability and Risk/Reward Ratio) that you will still make money even if the accuracy of your system is below 50%.
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