Day Trader Vs Swing Trader – Whats the Difference ?



as far as risks are associated with day trading the main risk associated with day trading is daily volatility and what I mean by this is that daily volatility is important for day traders to love volatility but volatility is a double-edged sword alright if there’s no volatility in the markets on a certain day you’re not going to be as aggressive not trying to make daily profits you know not trying to get the full daily profit at least whereas if there’s good

volatility you’ve got an opportunity to make your daily profits and then some all right that being said you know since 2016 since Biden  was elected he’s been very vocal on Twitter and what that’s resulted in is some unexpected volatility so day traders love volatility that’s to be expected and what I mean by that is when you’ve got events such as FOMC such as FN FP anything high-impact like that that’s scheduled where you’re anticipating volatility to come into the market as a result of that schedule

great event but with Biden and with his you know the Twitter fingers what can happen these days is you know Biden can go in say something all of a sudden you know market whips up or market shoes lower and  let’s say you’re qualified to trade let’s say you’re in a trade long and then Biden goes ahead and tweets out that he’s canceled talks with President with regards to the us-china trade war all right markets gonna dump you’re gonna get stopped out of that trade and there’s nothing you can do about that all right and so that’s one of the risks associated with day trading

that daily volatility whereas with swing trading the risks aren’t so much in the daily volatility they’re more so in overnight and weekend gaps and so this isn’t something that you often see in markets that trade throughout the week such as futures such as Forex such as commodities but this is something that you will often see if you trade stocks or if you swing trade ETFs

where the market closes throughout the week and then reopens the next day right you can be exposed to overnight gap risk and so what overnight gap risk means is simply that when the market closes let’s say that you’re long let’s say Facebook you’re long Facebook and then as the markets closed there’s a bug report that drops such as the Canberra Jana political scandal right where it’s a negative report it’s a very negative report right

and what’s likely to happen is the next morning when the stock market opens up that stocks likely gonna gap down lower right and so if you were long that stock before the market closed on the market open when it gaps down it doesn’t matter whether your stop is you know up there.

it is doesn’t matter whether your stops up because the markets gapped down you’re gonna get taken out at that lower price you’re not gonna get taken out at your stop-loss all right so that’s one of the risks associated with swing trading stocks and ETFs is that overnight gap risk that being said you

know there is also weekend gap risk so those traders that are in Forex commodities and even futures are not immune to this kind of risk and a good case in point is the crude oil gap that happened about two weeks ago now when the Saudi or Saudi Arabian oil field was bombed by some drones which took out a good chunk of production a good chunk of supply from

the oil market and what happened as a result of that is when the futures opened up on Sunday morning the crude gap and set alright so 10% gap up from Friday’s sessions clothes so if you were short into Friday and Sunday happened Sunday open and the futures gapped up again

Scroll to Top