Swing Trading

• Swing trading takes place from two days to up to about three weeks. Swing
trading strategies can be similar to day trading strategies. The patterns
sought can be looked at on longer time frame charts - maybe using the 4
hourly or daily chart rather than the 15 minute or 5 minute chart that day
traders might use. Swing traders will look to place a number of trades in a
given week. That number will probably be in the single figures, but you’d
expect to be placing more than one or two trades a week.
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• The term Swing trading can be confusing as some people take it to mean a
specific strategy or set of strategies, rather than a trading time frame.
Some corners of the internet refer to Swing trading as a type of day
trading that relies on picking momentum assets that build in a trend over a
few days or a week. We will stick to the more common definition for swing
trading: trading (whatever the strategy) by holding trades from two days to
three weeks.
 Day Trading
 

Day trading, is defined very simply as a trading strategy which

rarely sees a trader hold positions overnight. Scalping is a form of
day trading, but is usually thought of as separate from other day
trading methodologies. In reality quite a few day trading strategies
see trades being held across a two day period. Any longer than two
days and you are not really day trading. Day traders will look to be
placing multiple trades in a day, but probably not the double
figures that you may see with scalpers. When I day trade I am
typically placing two to three trades a day .
 
 Scalping

• Scalping is trading over very short time frames, potentially as short as a few
seconds. It might be as long as a few minutes. Scalpers will be looking to bag
multiple small profits over the course of a day. Scalping will usually take the
form of technical trading and is typically where people are looking for a
predictable, repeatable pattern or price behaviour that they can take trade
very quickly. Advanced strategies may feel a bit like ‘gaming’ the system and
be based on taking advantage in inefficiencies in brokers’ pricing or the bid /
offer spread.
• 
• Profit targets will be less than 20 pips usually and sometimes much smaller.
Scalpers will need a broker that has very fast execution of trades and low
spreads. The spread will be an unusually large percentage of a scalp trade. If
you are looking for 10 pips profit on a trade and the spread is 1 pip with one
broker and 2 pips with another broker, then that is a 10% difference in the
potential profit of every trade you take!
 Position Trading
• Position trading is the form of trading that has the most in common with
traditional investing. Position trading involves taking a trade and holding it
for time frames from two or three weeks through to months or maybe
even years. This is the lowest intensity form of trading and will typically
(but not always) involve a touch of fundamentals trading as well as
technical trading.
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• Shares traders often have longer outlooks than Forex traders who tend to
trade shorter time frames with greater leverage, looking for greater
returns. The Forex markets are so volatile that it is less common to see
Forex traders holding leveraged positions for weeks or months. With the
general expectation that stocks and commodity prices will rise over time,
or at least move in cycles, these assets often lend themselves better to
this longer term trading. But, as with all things in trading, these are
generalisations and there will always be exceptions to the rule!