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Find the best trading system |Differences between Swing Trading and Day Trading

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Best Trading System

What is the best trading system in Forex? No Forex analyst can give a straight answer to this question. Many will answer that Swing trading is the best. Some will answer that day trading is the most effective system. Both parties have their own argument on their opinion. We would like to see this topic from a neutral view in this article.

How to find the best trading system for you? 

This is where most traders go totally wrong and it is one of the main reasons why most traders fail. Choose a trading system that does not go well with your character traits, your belief system and your personal strengths. Often a trading system is exactly the opposite of how they should be trading. Of course, your trading results are not where they should be.

Ask yourself: how is your current trading system? Did you found it in a forum, after a search on Google or was recommended by someone who spoke in a chat room? Most traders choose their system randomly and do not think about the characteristics of their trading system and how that matches their personality.

Know yourself : Self-awareness is the key to trading success

How much you know about yourself? Most people spend more time surfing through visiting forums in search of the next system to really think about what they are as a trader. Are you patient or easily bored; Are you a good decision maker or does it take long for you to decide; Are you emotionally stable or you loss you mind and emotion while trading; you can maintain a high level of concentration for a long period of time or you easily distracted?

All these questions are important to answer if you want to find the perfect trading system. a trading system that takes advantage of its strengths is necessary, limits exposure of their weaknesses and lets you use its full potential.

Two major styles of trading

In what follows we split between day trading and swing trading. Of course, there are some trading styles, but those two guys build the foundation for most trading styles.

best trading system

Day Trading

Day trading is speculation in currency and securities, specifically buying and selling financial instruments within the same trading day. A day trading describes a style of trading when the trader actively trades for several hours, usually at the bottom of the markets or top of the markets and makes several trades in a day.

Swing Trading

Swing-trading is the opposite, Swing trading is a speculative activity in financial markets where a tradable asset is held for between one and several days in an effort to profit from price changes or ‘swings’. When the trader follows the longer terms, just a few trades every week or month, rarely more than one a day and not sit in front of the charts for several hours at a time.

The following table shows the differences between the Day Trading and Swing Trading regarding the different characteristics and emotional concepts:

Day-trader

Swing-trader

Decision makingHas to make lots of decisions in a short period of time.Has more time to think through his decisions.
Handling drawdownsHis trades are over fast and drawdowns don’t take much time.Drawdowns and pullbacks during trades  can last for days at a time.
FocusNeeds a lot of focus during the active trading sessions.The active trading time is limited and during the trading sessions, not as many things have to be done.
PatienceSeveral signals and trades during one session.Needs a lot of patience. Often, waiting days or weeks for setups.
Emotional stabilityHas to be emotionally stable. Has to be able to shake off losses fast and keep on trading. Revenge trading can be a problem.Has time to recover from a loss. He rarely has to make more than one decision during a trading session.
PressureLots of pressure during live trading. The lower time-frames can move fast, many influencing factors at all times.Has time to plan and analyze his decisions and trades.

If you want to know more about the differences between swing trading and day trading, you can read this article from Investopedia: Swing vs. Day trading

What does this mean for you?

This article is intended to help you to audit yourself and also demonstrate that the choice of a trading system must be done with caution. At the height of their full potential as a trader, you have to have a system that supports your strengths and weaknesses that you can overcome. So, finding the best trading system is completely up to you. No one can choose it on your behalf. Make sure that you get to use all your strength on trading with what you think is best trading system for you!

About the author

Yan

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