I don’t think I will ever day trade again.
I have been trading for around 10 years, and I started as a day trader with a really small account, but in the last few years I have only taken swing trades.
I no longer see the point of day trading.
To understand this, let me ask you what you think actually grows the account.
Is it the win rate?
Let’s say a day trader had a 5% edge, so it’s like they have a 55% win rate, but a swing trader sucks at trading and only gets around 2% edge, or a 52% win rate.
Now, since the day trader has a higher win rate, their profit graph starts to move up faster, and the swing trader goes up slowly.
But what if I told you that the swing trader actually trades 5 times more?
Suddenly, the swing trader’s profit graph starts to move up more aggressively.
It actually grows the account faster with a lower win rate.
So far, we have established that a high win rate doesn’t necessarily grow the account faster.
The number of trades does.
If you have a trading strategy with a really high win rate, but it is shy and rarely gives you trades, then it won’t grow your account faster.
On the other hand, a decent win rate strategy will make more money just because it gives more trading opportunities.
But here’s the thing.
It’s not like only swing traders can find more trading opportunities.
I would say, since day traders trade on smaller time frames where the price moves faster, they get trading opportunities faster.
In fact, they get more trading opportunities than swing traders.
Suddenly, day trading starts to make way more profit.
On the other hand, it’s not like swing traders suck at trading.
They can also get a similar high win rate.
There is no data that shows only day traders get a higher win rate and swing traders don’t.
So when we use the same high win rate, the only advantage day trading has is that it gives more trading opportunities than swing trading.
And since more trades mean more money, so far day trading is ultimately making more.
But here’s a big plot twist.
In swing trading, you don’t have to stick with a single stock or a forex pair.
You can trade hundreds of stocks and many forex pairs.
This greatly increases the number of trades you take, and that makes the account grow faster.
But then, day traders can also do the same thing.
So, it’s not like swing traders have the advantage.
But here’s the thing.
When I was day trading only, I used to pay around 10% of my profit or loss in broker charges and other fees.
But while swing trading, I was only paying around 1% in charges.
This difference is because day traders have to trade with bigger amounts, to profit from a smaller price move.
Swing traders, on the other hand, take trades with a smaller amount, because they profit from a bigger price move.
These simple fees instantly reduce the day trader’s account growth by a big amount.
Just because of the lower charges, swing trading is making significantly more money than day trading.
But things get even more interesting.
Since day traders are trading on smaller timeframes, most of it is random nonsense.
Since thousands and thousands of traders take trades at the same time, there is a lot of market noise, or random up and down movement.
This nonsense movement is more visible when you zoom in on the price, like day traders do on smaller timeframes.
And as a result, many day traders end up taking trades on random market noise.
There is market noise on higher time frames as well, but it takes a lot of money to make a big, noticeable move on a higher time frame.
If you see a strong green candle, then you can bet that something really positive has happened, and that’s the reason for that strong upward move.
It is not caused by some random noise.
Because of this, swing traders have to filter market noise less than day traders do.
Just because of this simple change, suddenly the day trader’s profit graph is strongly moving in the downward direction, while swing traders are still making a profit.
But it’s not over yet.
Let me tell you how I lost 30% of my account one time while day trading.
I took a trade and then walked out of the room.
During that short time, news came and the price moved strongly in one direction.
And before I came back, my account was down by a really big amount.
In day trading, since the price moves so quickly, if you just step out of the room or go take a piss, there is a good chance you will miss out on some good trading opportunities.
I have literally done this so many times.
But since swing traders trade on a higher time frame, which moves slower like a turtle, they have enough time to even take a shit and come back, and still the entry signal would not have appeared.
I don’t think I have ever missed a good entry point while swing trading just because I didn’t see the chart continuously.
Even with all these disadvantages, the swing trader’s profit graph is still moving up and up, while the day trader’s profit graph is strongly moving down and down.
But there is a big thing that really separates a successful trader from an unsuccessful one.
It’s how you control your emotions while trading.
You know how I said I lost 30% of my account really fast while day trading?
Well, since this big loss was on a big account size, I had to take an entire month off from trading because I couldn’t take the next trades properly.
I couldn’t believe that I lost a big portion of my account just because I stepped out of the room at the wrong time.
If I had taken trades after that, I would have tried to revenge trade and recover all that loss first.
I would have made decisions with high emotions and less logic.
And that’s a common story among day traders.
Whenever a loss happens, the price is still moving really fast, and the next setup appears before we have emotionally recovered from the previous loss.
And as a result, we end up making bad decisions, which leads to more losing trades.
Emotions are horrible for trading, and day traders have it even worse.
On the other hand, when I swing trade and make a loss, I have many hours to recover emotionally.
Because of this, I almost never make a decision emotionally while swing trading.
Even though we have added disadvantages to swing trading, its profit graph is still moving up and up.
But on the other hand, the day trading profit graph keeps moving down and down faster than before.
To counteract all this, day traders not only have to get a really high win rate, which is really difficult, but they also have to manage their emotions, which is even more difficult.
On top of that, they are still going to miss entries, and the market noise will still be there.
On the other hand, the fixed disadvantages are not significant enough to move the profit graph down in swing trading.
Because of this, we don’t have to aim for a really high win rate.
And our emotions stay in control.
If someone says that they can get a really high win rate while day trading, which might move their profit graph higher…
Well, if you can do that with all these disadvantages, then you can also win more with swing trading, which already has fewer disadvantages.
So far, there is no big reason to day trade to grow the account faster.
But there is a really big advantage day trading has that will make you a profitable trader if you do it right.
Since I started as a day trader, it means I somehow survived making big losses at the start.
That’s because I started trading with the smallest account size possible.
Back then, I didn’t know day trading had so many disadvantages.
In the beginner stage, we don’t have enough experience to know what’s good and bad.
And you only gain enough experience by taking more trades in the live market.
And as we have seen, day trading gives way more opportunities to take more trades than swing trading does.
As a result, when I was day trading, I gained the highest amount of live market experience that taught me what actually works and what doesn’t.
I took hundreds and hundreds of trades in a really short amount of time while day trading.
But if I had started as a swing trader, it would have taken me a really long time to take hundreds and hundreds of trades that actually taught me what works and what doesn’t.
The only big advantage day trading has is that it gives a lot of live market experience faster than swing trading does.
But once you gain enough experience, you realize that day trading has all these massive disadvantages, which are ultimately holding you back from making big profits faster.
So when I started doing more swing trading, the profit stayed pretty good even when I found a fewer number of trades, because the disadvantages of day trading disappeared.
I don’t think I will ever blow my trading account, or even make a big loss like 30% in a really short amount of time while swing trading, because the price simply doesn’t move that fast on higher timeframes.
My confidence in trading is really high when I swing trade.
But if I were still day trading only, my confidence would have been low because I would have doubted everything from time to time after making a big loss.
I would have feared that someday emotions would take over after making a big loss and I would blow up everything.
But in swing trading, I don’t have that fear because my probability of losing big itself is much lower.
So if you are a beginner trader, use day trading to gain live trading experience faster with a really small or practice account.
And then, to actually grow the account faster with fewer disadvantages, it is a good idea to switch to swing trading like I did.