Trading Styles Continued - Swing Trading

The main difference between day trading and swing trading is that swing traders usually have a slightly longer time horizon than day traders for holding a position in a stock. Like day traders, swing traders also attempt to predict short term fluctuation in a stock's price. Swing traders however are willing to hold stocks for more than one day in order to give the stock price time to move, or to capture additional momentum in the stock's price. Swing traders generally hold on to their stock positions anywhere from a few hours to several days.

Swing trading has the potential of providing higher returns than day trading. Unlike day traders who liquidate their positions at the end of each day, swing traders assume overnight risk. And there are some significant risks in carrying positions overnight. For example news events and earnings warnings announced after the closing bell can result in large, unexpected and possibly adverse changes to a stock's price.