Every investor in the stock market has a distinct goal and reason for doing so, as well as a varying amount of time available to handle those investments. As a new trader, you can take positional share trading tips in India. Intraday trading can be a better option if you aim to invest money in the stock markets to withdraw it daily.
However, if you do not have the time to dedicate to intraday trading and are okay with leaving your money in the markets for a few days, swing trading is more appropriate for your trading style. This guide will describe everything you need to know about intraday and swing trading and information on selecting your best choice.
What Is Intraday Trading?
Intraday trading refers to buying and selling financial securities on the same day. Every day before the market closes, day traders shut out their positions. Instead of owning the securities for the long term, they seek to profit from short-term market volatility. Their profit results from the price differential between the purchase and sale.
For instance, when the market opened, you purchased 200 shares for Rs. 20 each. After an hour, the price began to rise; then, you decided to sell those shares for Rs. 23 each. You will earn a profit of Rs. 600 on the same day. After two hours, you purchased 100 shares once more for Rs. 15 each. However, the price started to fall this time and is anticipated to fall even more the next day. Therefore, you sold those shares the same day for Rs. 13, suffering a loss of Rs. 200.
- There is no overnight risk; you get to sell everything at the end of the day
- You can use the profits from the previous day to make bigger deals the following day
- Less capital is needed compared to swing trading
- Day traders are more prone to make decisions about their trades based on their emotions or the opinions of others. Making decisions under duress can be challenging.
- More brokerage fees are required because they trade more, which can reduce overall profit.
What Is Swing Trading?
Swing trading is another form of short-term trading in which traders hold the shares for more than a day before closing out their positions after a few days or weeks. Swing traders typically leverage shorter price movements. To assess security, they can combine fundamental analysis with technical analysis.
For instance, a swing trader placed a stop-loss order at the most recent low of Rs. 535 and bought the stock when it displayed a bullish signal above the latest high of Rs. 550. He discovered the stock was rising during the last two weeks and had a chance to make Rs. 45 per share. To support the transaction, he examined the fundamentals. After analysis, he sold the shares for a profit of Rs. 45.
- You take less risk when you open fewer positions
- Traders that engage in swing trading want to make one successful trade rather than several smaller trades
- Traders can examine the market a few times per day or even a few times per week
Two to three trading hours are usually needed for swing trading each day. You have the rest of the day to yourself.
- There is a risk of leaving the position open overnight
- Economic and political events and natural disasters can wipe out a lot of profit
- Brokers may charge swap fees
- Swing trading can take weeks or even months before a trader can reach his target and close his position. Impatient traders will struggle with this
Intraday Vs. Swing: Which Is Advisable for New Traders?
If you are a new trader, you might need help determining the best trading strategy. Making the most profit possible should be your top priority. Which is more profitable, swing and day trading, then? Both trading styles offer a wide range of advantages, but there are disadvantages, which you must note while choosing your style. Here is a comparison of both trading methods in terms of profitability and safety:
Intraday trading provides a higher chance of making money because of the sheer volume of trades. However, this does not imply that a day trader will consistently profit more than a swing trader. To turn a profit, day traders need quick decision-making abilities. They must be able to open or close a deal in milliseconds to maximize earnings or limit losses when the market goes against them.
Swing trading may result in fewer but higher profits because the market is more likely to move further from its opening price the longer a position is open. The trader will profit if it goes in the direction they projected. They will suffer a loss if not.
The trading approach suitable for new trainers depends on a variety of elements, including a trader’s level of trading expertise and experience, market volatility at any given time, the amount of time a trader is prepared to invest in trading, and any significant news developments that might abruptly alter an underlying market.
There are significant dangers in both day trading and swing trading. Generally speaking, the potential benefit increases with risk. Day trading relies on far more minor price fluctuations than swing trading; thus, the risk of loss is typically minimal. However, countless tiny earnings or losses can quickly pile up when you make several trades daily.
On the other hand, swing traders come in and go out of the market throughout lengthier trends, which creates the possibility for higher earnings and losses. Both trading methods have some risk, so how much of a chance you take on depends on your talent and experience as a trader, the movements of the underlying market, significant events that could influence the price, and an efficient risk management approach.
There is a lot of debate on intraday and swing trading. Swing trading in the share market in India rewards your perseverance and eventually outperforms the market.
Many traders fit into either of the two categories, and both trading approaches are very popular. Based on your trading personality, you can choose a style. However, swing trading allows you more time to adapt to the market and place bets with a higher chance of winning. However, to swing trade effectively, you must master the three M’s: mindset, method, and money management.