Shorter trade times actually require a larger time commitment by the trader.
There are many different ways to trade stocks and other financial securities. Day trading and swing trading are two of the most popular methods. Day trading is the practice of buying and selling the same position over the course of a single day in an attempt to profit from daily price volatility. While day traders close out all positions before the market closes, swing traders generally hold their positions for several days to several weeks.
Day Trading Advantages
The biggest advantage offered by day trading is you are never exposed to overnight price surprises. Because day traders close all positions before the market closes, there is no risk that they will experience a loss if the price jumps in response to news-related events, which occur when the markets are closed. Day trading also allows you to take quick profits and you can see the results of your trading performance at the end of the day.
Day Trading Disadvantages
The biggest disadvantage to day trading is it takes a lot of work. Because you work to profit from intraday price swings, day trading requires that you sit and stare at your computer screen throughout the day looking for potential trades and reacting to ever-changing prices. In addition, trading commissions can quickly add up. Because day traders take small, quick profits, many day traders make many trades in a single day.
Swing Trading Advantages
Swing traders largely ignore small intraday price changes and instead focus on the larger price swings, which take place over the course of several days. This means that they make fewer trades than day traders and they seek to take larger profits from each trade they make. Swing trading allows you to analyze the markets and look for potential trades in the evening after the market is closed and does not require you to watch the markets throughout the course of the trading day.
Swing Trading Disadvantages
The biggest disadvantage to swing trading is you do have exposure to overnight price surprises. Many times a stock's price can change significantly while the market is closed, which can potentially lead to significant losses when the market reopens the following day. Moreover, because you will hold a position for several days or longer, you will need to accurately predict the future price direction, rather than just react to buying and selling momentum like many day traders do.
