Forex Day Trading and Forex Swing Trading - What is the Difference?

By Rahul G

When Forex Trading is talked about, there are two kind of trading styles that are very commonly used - Forex Day Trading and Forex Swing Trading

Both styles are very widely used. Apart from being used on different time frames, there are some big differences in both of these trading mechanisms. Lets go through some of them -

1. Profit Potential Pips per Forex Trade -

Since Day Trading is carried out on lower time frames (5 min chart, 15 min chart or 30 min chart etc), the amount of pips that can be made per trade are typically not as high as the swing trades that are carried out on bigger time frames (1 hr chart, 4 hr forex chart , 8 hr chart etc.)

2. Risk Per trade -

Similar to Pips potential, since the Day trading is on lower time frame, the amount of pips risked per trade is also very less as compared to Swing Trade.

3. Duration of Trades -

A typical Forex Day Trade lasts anywhere between 30 min. to 4 hrs depending on the Time frame of a trade. So, a trade on 5 min chart will last for lower time as compared to one on 15 min. chart

Where as a swing trade lasts from anywhere between 4 hrs to a day and infact some last for few days.

Since the day trades don't hast for more than few hours, the amount of concentration needed for day trading is much higher than swing trading. If you are just 15 min late in identifying a trade, you may miss the entire trade.

4. Application of Technical Analysis - Both Forex Day Trading and Swing Trading are typically carried out using Technical Analysis. However the higher the time frame, the more accurate the technical analysis becomes. Due to this, technical analysis is more accurate in Swing Trading than in Day Trading.

For both form of trading there are some specialized technical indicators. For e.g. Use of Daily Pivot Points is used in Day trading to identify Support and Resistance levels.

When choosing a particular trading style, it should be seen which form of trading are you more comfortable with.

The above points can help you choose a form of forex trading.

But choosing a form of Currency trading is just one part, the next is to find a reliable Forex trading system that can make money consistently. And if you can come across a course that can not only teach you such a reliable system, but can explain to you the important techniques that can make you a good trader, then that is fantastic. One Such Forex Trading Course called Forex Success Formula is coming very soon. Click on the link to join its pre-notification list as well as get a free forex trading ebook