Scalping vs. Swing Trading

Scalping vs. Swing Trading

In this article, we’ll discuss:

Regarding active trading, two of the main strategies traders can use to make profits are scalping and swing trading. Both approaches have their pros and cons, and in this blog post, we will take a closer look at each strategy to help you decide which is right for you.


What is Scalping?

Scalping is a short-term trading strategy that involves taking small, quick profits on small price movements. Scalpers typically hold their positions for just a few minutes or even seconds, and they use a variety of technical indicators to make decisions.

Scalping is a type of day trading. There are many day traders who hold their positions for longer than scalpers. Here is an article that shows the difference between swing trading and day trading in general.


Pros of Scalping

The biggest advantage of scalping is that it can be highly profitable. Because scalpers are only looking for small price movements, they can enter and exit trades quickly, making many trades rapidly. This can lead to a lot of profits, even if the individual trades are small.

Another major advantage of scalping is limited risk. You’re in and out of the trade so fast that it typically can limit the amount of losses you can incur on any given grade.


Cons of Scalping

The most significant disadvantage of scalping is that it can be very stressful. Because scalpers are looking for small price movements, they must be speedy in their decision-making. This can lead to high stress, as there is always the possibility of missing out on a profitable trade.

It also requires a lot of screen time. You have to constantly be watching your computer screen to look for opportunities. To make a lot of profit from scalping can be like a full time job, and after you’ve done it for long enough, it can start to get boring and repetitive in a lot of ways since you’re just staring at a screen all day.

Scalping is at a disadvantage when it comes to the bid and ask spread when compared to swing trading. Here’s an example. Imagine that the stock is Apple (AAPL), and that the bid is 100.00 and the ask is 100.01.

If the scalper wants to buy the stock, they have to pay the ask price of 100.01. That means they are already one cent down to start the trade.

The same is true for a swing trade, but with a scalper the target profit might only be 5 cents whereas with the swing trader it might be 5 dollars. So in other words, the bid and ask spread has a much more significant impact for a scalper.

Another disadvantage of scalping is that sticking to your trading plan can be difficult. Because scalpers are looking for small price movements, they can often be tempted to enter trades they shouldn’t. This can lead to losses, as well as missed opportunities for profits.

One final disadvantage of scalping is that it requires a lot of capital. Brokerages don’t let you take on more than 3 “round trip” trades in a week unless you have at least $25,000 in your account. That means you could only do 3 scalp trades per week if you have less than that amount.


What is Swing Trading?

Swing trading is a longer-term strategy involving taking profits on larger price movements. Swing traders typically hold their positions for a few days or even weeks, using various technical and fundamental indicators to make decisions.


Pros of Swing Trading

One big advantage of swing trading is that it can be less stressful than scalping. Because swing traders are looking for larger price movements, they don’t have to be as quick in their decision-making. Swing trading is a lower-stress option, as there is more time to decide.

Along the same lines, it requires way less time than scalping. Imagine being able to be a profitable trader and spending less than an hour per day on it. That’s one of the benefits swing traders get. You’ll find a bunch people who have full time jobs and yet are also avid swing traders.

Another advantage of swing trading is that it can be more profitable than scalping. Because swing traders are looking for larger price movements, they can make more money on each trade. This can lead to greater profits, even if the number of trades is smaller.

It’s also probably easier to learn to swing trade than it is to learn to scalp profitably. That means that swing trading is good for beginners who are just entering the world of stock market trading.

It’s often just a matter of learning chart patterns and swing trading indicators, which doesn’t require as much mental computational power as learning to scalp effectively.

Another advantage of swing trading is that it requires less capital. You can literally take on a swing trade with just $10 (assuming the stock price was $10 or less).


Cons of Swing Trading

One disadvantage of swing trading is the risk involved, although this type of risk is faced in all forms of trading.

Also, if you’re the type of person who likes action and wants to be doing stock market activities all day, then swing trading can be hard because you get the urge to over-trade. Swing trading often requires patience, and in some ways it might hurt your profitability if you watch the trades too closely.

Another disadvantage of swing trading is that it can take longer to see results. Because swing traders are looking for larger price movements, a trade can take days or even weeks to play out. This can lead to frustration and the possibility of missing out on other opportunities.


Joining the Swing Trading Club

If you feel like swing trading is up your alley, then consider joining our club. We have a swing trading discord chat room where our members discuss trade ideas and celebrate success.

We also teach the swing trading strategies that we like the best. We talk about how to enter the trades and how to exit them.

Anyone who signs up gets access to our swing trading course as well. We think it’s a pretty sweet deal at only $19 per month for everything we offer.

If you feel like you are drawn toward scalping, then this group is probably not a good fit for you, but we wish you the very best! The stock market is made up of so many types of traders and investors, and we truly appreciate every aspect of it.

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