Ever wonder which trading style is most suited to your goals?
Although both methods can be profitable, there are a few key differences between the risks and rewards they both offer. Short term trading can give instant rewards, we've found that trading long term allows you to trade smaller positions, while giving you higher overall rewards.
Often, short term traders can find themselves stopped out of a trade due to a number of reasons, ranging from high volatility or a sudden pullback. while a long term trader (swing trader) trading at a smaller lot size, will be able to ride this period out and gain overall more pips, while taking a smaller risk, allowing them to control their emotions during a period in which a trade may be going against their direction.
Lets take a look at some examples...
In this example, a trade is shown to achieve 528pips in a matter of two weeks, allowing a for a number of great entries. this is known as trend trading and is effective more often than not. Although trading trends is possible within a short term basis, its not always as effective. Entering a short term trade based on the following trend at the wrong entry point could lead to a loss due to a pullback. Lets take a look at an example..
Entering into a short term sell position at any numbered point shown above could easily take out a stop loss, before eventually reversing and going into good profit. While during a long term trade, you would expect the trade to go against you at times, as long as the end goal is profit.
Benefits of swing trading
Trading daily charts has numerous benefits in comparison to traders trading 5-minute charts, while trying to scalp small profits. One of the main benefit of this style of trading is that it allows you to skip all the market noise that may be present in smaller time frames, such as those in a 30-minute chart.
Fit trading around your schedule
Trading on larger time frames allows you to focus on higher time frames, thus allowing you to trade on your own schedule. This method would also allow you to open a trade and not constantly keep an eye on the charts, allowing you to get on with your life.
Although it seems swing trading is our favoured trading method due to its higher accuracy & success rate, it all comes down to your preferred trading style and goal.