Why Swing Trading Is Better Than Day Trading. Advice For Forex Day Traders Making The Highly Intelligent Switch To Trading With Sanity
I’m a firm believer that swing trading is better than day trading. Here is how I look at it:
|Day trading is like running through a poorly lit maze for hours a day while highly agitated Spider Monkeys throw ping-pong balls at your head.|
|Swing trading is like sitting on a beach in Aruba sipping a Balashi Beer listening to the lapping of calm waves as the warm Caribbean winds wash over you.|
Can you tell I’m missing my vacation time in Aruba?
Swing trading is better than day trading because the setups are stronger, trading costs are lower, trading can be done in only minutes a day, there is less burnout and it can be highly profitable.
Swing trading Forex and Crypto markets is a major part of my wealth plan.
While I was looking over the results of my last two trades, I figured out something that may help day traders make the switch to swing trading. So, if you are thinking of making the switch, and I highly recommend you do, this way of looking at trading may help.
Why Day Trading Is So Attractive
The attraction to day trading starts with these two words: IF ONLY.
- If only I could extract profits from the Forex market every day.
And that is the fantasy, isn’t it? I mean it is called “day” trading after all. So, the objective is obviously to be profitable on a daily basis.
Imagine cranking up your computer each day and scanning your charts for the perfect trade. With so many currency pairs to choose from, that should not be that hard, right?
You identify the perfect trade entry, use a tight stop loss and make tons of profit on a big market move that lasts less than a day.
Cha-ching. Another profitable day of trading in the books.
Do this day in and day out and the profits really add up. Pretty soon you’re quitting your day job and living the life of travel and leisure that a profitable day trader deserves.
But that is the problem with fantasies. They don’t exist in the real world.
Day trading is extremely difficult, time consuming and stressful. And trust me, not every day is going to be profitable. That is the truth.
Pretty soon you are starting to wonder whether all the time and effort you put into trading is worth it. And then you are just one step away from abandoning Forex trading altogether and missing out on a tremendous wealth building opportunity.
But the good news is, there is an easier way… swing trading.
How To Look At Swing Trading Results
Like A Day Trader
I look at trading as a long term, wealth accumulation activity. This means I am not looking at my performance on a day-to-day basis. I actually look at my performance on a YEARLY basis. And my plan is a long term plan.
But while I was looking over my last two trades, I was thinking on how traders COULD look at the trading on a more short term basis (if that is what they feel is necessary).
Let me give an example of what I mean.
This trade was opened on 12/22/2021 and Take Profit 1 was hit on 12/27/2021 and the Trail Stop was hit on 1/10/2022.
So, in 5 days I banked +150 pips and in 19 days I banked +375 pips. If we break that down per day it is:
- Take Profit 1: 30 pips a day
- Take Profit 2: 19.7 pips a day
Or, you could look at when we lock in profit, and think of it as “daily profits”.
- 12/28 we moved the stop from +2 pips to lock in +25 pips (+23 pips profit)
- 12/30 we moved the stop from +25 pips to lock in +150 pips (+125 pips profit)
- 1/3 we moved the stop from +150 pips to lock in +225 pips (+75 pips profit)
- 1/4 we moved the stop from +225 pips to lock in +300 pips (+75 pips profit)
- 1/5 we moved the stop from +300 pips to lock in +330 pips (+30 pips profit)
- 1/9 we moved the stop from +330 pips to lock in +375 pips (+45 pips profit)
See what I’m talking about? Every time we lock in profits, it is like securing positive pips for the day.
Let’s look at the next trade…
This trade was opened on 12/22/2021 and Take Profit 1 was hit on 12/29/2021 and the Target was hit on 1/12/2022.
So, in 7 days I banked +110 pips and in 22 days I banked +330 pips. If we break that down per day it is:
- Take Profit 1: 15 pips a day
- Take Profit 2: 15 pips a day
Again, you could look at each time we locked in profits as “daily profit” as well. Look at the snapshot and calculate how many pips we secured every time we locked in profits.
And keep in mind, these trades were running pretty much at the same time. This means the “daily pip” numbers would be the addition of both trades.
What’s funny is that this way of looking at trading has a much better chance of fulfilling the day trader fantasy of making positive pips every day. And I’m even counting the weekends when the market is closed in the above examples.
My point is this…
Day traders want to fulfill the fantasy of banking profits from the Forex market on a daily basis. This means they want to enter the market and exit the market with profits within one day. And this is a very difficult, time consuming and stressful proposal.
But if you look at the way I swing trade, and break it down into daily profits, either with banked profit or locked in profit, you’ll see how much easier making “daily” profits becomes.
Earnings Must Exceed Efforts
OK, let’s look at this another way.
When thinking about trading, I have a REQUIREMENT. My earnings must exceed my efforts.
So, what does that mean?
It means my potential earnings from my trading activities have to feel “worth it”.
If I am going to spend 8 hours a day battling the markets looking for daily profits (like a lot of day traders do), I’m going to want to be compensated A LOT. This is a difficult, time consuming and stressful way of trading… so if I’m not making a lot of money for my efforts, it is going to get old real fast.
On the other hand, I only trade a few minutes a day. So, basically any profit feels worth it. As a matter of fact, it feels almost too easy due to the high profit potential of the trading and the low amount of time and effort I put in.
Let’s break down some numbers:
In 2021, all the currency pairs I trade produced +2697 for Take Profit 1 and +2468 for Take Profit 2.
5 trading days a week for 52 weeks = 260 trading days.
- Take Profit 1: 2697 / 260 = 10.37 pips a day
- Take Profit 2: 2468 / 260 = 9.49 pips a day
That works out to +19.86 positive pips a trading day. This is close to the coveted 20 pip a day profit a lot of day traders aspire to.
But here is the thing… these results were achieved only trading a few minutes a day.
260 trading days x 5 minutes = 1,300 minutes or around 22 hours a YEAR.
Compare this to how many hours a day traders spend glued to their trading charts looking for those daily profits. They probably spend more time trading in a week than I do all year.
Can you start to see how it is a lot easier for earnings to exceed efforts with my style of trading?
Bring Some Sanity Back To Your Trading
Look, I get the attraction to the day trading fantasy… I really do.
But for most traders, making daily profits is simply not possible. And even if you can figure out how to be profitable over the long term day trading, the time and effort might not seem worth it.
The truth is, reaching your financial goals through trading takes time. So, you need to trade in a way that makes sense over the long term. Otherwise, you are going to burn out, give up and miss out on the incredible wealth accumulation potential of simple Forex trading in only minutes a day.
I guess the question is simple…
What would you rather hear?
- The screeching of a Spider Monkey as it pelts you in the head with a ping-pong ball.
- The soothing splashes of Caribbean waves as you sip a Balashi Beer.
Pretty easy choice, if you ask me.
If you want to copy what I’m doing, go to Forex Signals Blast Off and embrace sanity.
To Your Wealth,