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Swing Trading vs Day Trading: Unveiling the Differences and Profits

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Swing Trading

Stock trading is a game of ups and downs. Despite our research and efforts to maintain a profitable portfolio, problems can arise anytime. To avoid such situations, experienced traders use several strategies to always stay ahead.

Traders don’t simply rely on a handful of stocks or buy a long position every time they buy. One such strategy is swing trading. For many investors, this is a key part of a portfolio that will yield high returns over the long term. Let’s understand swing trade and how it differs from day trading.

What is Swing Trading?

Swing trading is a strategy that aims for small profits over 5-10 days rather than big profits over weeks or months. The optimal period for this trading method may be several weeks, depending on the market. Usually, a trader who holds stocks for a long time usually expects a 20-25% profit. However, the profit target for these stocks is in the 5-10% range. If you are used to holding positions for the long term to generate higher profits, this strategy may not seem appealing.

However, in this trading strategy, you can get multiple small wins that add up to a significant amount of money. For example, a 5% weekly increase in 4 weeks could be the same as a 20% increase in 2 months. Considering the time value of money, we find that the swing strategy yields better results.

Like small wins, so are small losses. For example, losses typically in the 7-8% range each month will drop to 3-4% in the short term. However, you can also hold stocks with good starting power. Alternatively, you can partially withdraw and hold longer for more profit. Swing trade stocks buy and sell quickly, allowing you to maintain liquidity and avoid market volatility.

How Does Swing Trading Work?

A swing trader can use two methods to participate in trading and make  profit from market movements. One approach is to follow trends.

Sell ​​or buy according to the major trends. Another way is to counter the trend, i.e., sell or buy against the main trend. The best stocks for swing trading in India are stocks showing big movements in the market or stocks with high market volume. The steps are as follows:

Look for stocks

The first step is to study the stock’s fundamentals before investing in it as part of swing trading. Our analysis should give you confidence that you can make big profits from these trading stocks in the short term.

Analyse the chart

Once you have identified a few stocks to swing trade, the next step is to study their charts to see how they have performed historically. For this purpose, charts such as Relative Strength Index (RSI), Moving Average Convergence Divergence (MACD), Volume and Trend Lines can be analysed. You can also read articles and industry news to build confidence in your profession.

Decide what to enter

A swing is when the stock price falls from the resistance level and rises from the support level. A swing trading strategy aims to take advantage of this up-and-down movement. That means buying at support levels and selling at resistance levels.

Now that you understand this strategy, you can place your stop loss order 5% below the entry price. Similarly, the profit can be 20% higher than the entry price.

Swing trading V/S Day trading

Day trading is buying and selling stocks within a day. It can also mean that positions are opened and closed within seconds. Day traders do not hold positions overnight. Swing trading, on the other hand, holds stocks for days to weeks.

This difference in patterns and expectations is the main difference between day trading and swing trade. Some other differences are detailed below.

  • In day trading, the leverage is usually 4x the amount invested. However, in swing trade, the leverage is double the amount invested. A day trader is a full-time trader whose main source of income is stock trading.
  • To make a decent profit, you must constantly monitor the market ebb and flow and make quick buy or sell decisions. However, swing traders are part-time traders.
  • Day traders place multiple trades daily and don’t wait to make big profits. Make multiple trades to get big profits. Instead, swing traders only select stocks that they believe can bring significant profits in the long run.

  Difference Between Day Trading vs Swing Trading 


    Swing Trading 

        Day Trading 

     Time         Horizon

Short-to-Medium Term (several days to weeks)

  Very Short Term (within a single trading day)


Capture price swings within an established trend

   Profit from intraday price movements


   Requires larger capital to hold positions for longer

Smaller capital required due to frequent trading

      Trading Style 

  Less frequent trading,  fewer transactions

Frequent trading, multiple transactions

      Risk Exposure

   Exposed to overnight market events

Not exposed to overnight market events


Ultimately, whether or not your swing trade is determined by your trading goals, time commitment, and risk tolerance. If you have a longer period and prefer a less intense trading approach, this swing trade may be a good choice. 

By carefully considering the differences between swing trading and other trading styles, you can craft a strategy that suits your financial goals and preferences.

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