Swing trading vs scalping – what is the difference between these two trading styles, and which is the best strategy for you? As you’ll soon discover, the answer depends on how much risk you can tolerate and how much time you want to spend in front of your computer executing trades.
If you possess great patience and precision, and don’t mind waiting a few days – or even weeks – to capitalize on your efforts? The swing trading style is perfect for you. But, if you are highly vigilant and work well under fast-paced pressure, scalp trading may be more up your alley.
These are just a few considerations – we’ll explore everything you need to know in this quick breakdown. You’re going to learn all the key differences between scalping and swing trading. We’ll help you identify the ideal trading strategy for your unique preferences and risk tolerance. Then, we’ll help you set off on the right foot with the secret to success – regardless of the trading strategy you ultimately choose. Let’s begin!
Swing Trading vs Scalping: What Is The Difference?
To help you understand the difference between swing trading and scalping, we’re going to define the two strategies. Then, we’ll compare and contrast them next to one another for further clarification. Let’s start with swing trading.
What Is Swing Trading?
Swing trading – as the name suggests – is a trading style in which the investor seeks to capitalize upon short-term swings in a stock’s price. Trades are executed over the course of a few days, or sometimes, a few weeks. This means you’ll take on some degree of risk after hours and on weekends as your position remains open.
But, you stand to gain substantial profits through these short-term price swings. And one of the best parts about swing trading? You don’t have to dedicate much time to the strategy. The low time commitment is one of the main reasons traders love this style. It’s great for those who work a full or part-time job and just want to trade on the side. You aren’t stuck watching charts all day like you would be with day trading – or scalp trading, as you’re about to learn.
If you want to learn more, we wrote a complete guide on what swing trading is and how it works. Or, for a more in-depth guide on actually getting started, check out our swing trading strategies for beginners guide! For now, we’ll move on to scalp trading.
What Is Scalping?
Scalping, on the other hand, falls under the umbrella of day trading as a subset. It requires a substantial time investment. You still capitalize on a stock’s price swing – but the swings you’re focusing on are in a much shorter time frame than with swing trading. Instead of waiting days or weeks to close your position, you get in and out in as little as a few minutes – sometimes just seconds!
As you can imagine, scalping requires great vigilance. You must be capable of handling stress and performing under pressure – if you miss the very small window to close your position, you may be stuck taking a loss.
You might be thinking to yourself – how do scalp traders make money in such tiny price swings? While the profit per trade is small, you may execute hundreds of trades a day. Those tiny wins add up when combined.
Swing Trading vs Scalping: Which Is The Right Trading Style For You?
Now that you have a better understanding of the principles of scalping and swing trading, which style is right for you? This is a question we can help you answer, but ultimately, it comes down to your preferences. How much time do you want to spend in front of the charts every day? How well do you deal with high-stress situations? How much experience do you have trading?
These are just a few of the questions you’ll need to ask yourself before deciding. Let’s compare and contrast the unique differences these styles have to help you make the right choice – starting with profits.
Swing Traders Enjoy Larger Profits, Scalpers Enjoy Faster Profits
Both scalping and swing trading can be profitable. The question is, how much profit do you want to earn per trade? And how fast do you want to realize that profit?
Swing traders will earn much more profit per trade – but you’ll have to be patient, as you may not realize that profit for a few weeks in some cases. Scalpers, on the other hand, earn minuscule profit percentages per trade. After all, this strategy entails capitalizing on minor price movements over a few minutes. However, you get the benefit of daily profits.
Swing Trading Is A Lower Time Commitment Than Scalping
We know many traders have other commitments – whether it be a job, kids, or simply the desire to spend time out of the office. If you want to earn good profits without spending all day in front of your screen, swing trading is for you. It requires far less time commitment than scalp trading.
Remember – with scalping, your goal is to capitalize upon momentary swings in a stock’s price. Once you get into a position, you have to sit in front of your screen and watch the tick chart of 1-5 minute charts awaiting your opportunity. With swing trading, though, you can enter your position, set your stop loss or take profit order, and leave your screen for the day.
And because you earn such small profits per trade with scalping, you need to execute a substantial number of trades per day to make a good profit. A single swing trade over a few days or weeks can outperform an entire week’s worth of scalping – with a fraction of the work.
Swing Traders Enjoy Less Stress Than Scalpers
Scalping is an extreme strategy that requires intense focus. The room for error is minuscule. As such, you can imagine how stressful a day of scalp trading is. Swing trading, on the other hand, is much less stressful. You’re less concerned with intra-day movement as you look at the bigger picture of a stock’s price over the course of a few days or weeks.
Ask yourself – how comfortable do you want to feel while sitting down to execute trades? Do you love sweating it out with high-pressure scenarios, or would you prefer to be cool, calm, and collected while making calculated moves? If you know you don’t handle stress very well and tend to let it influence your decision-making, scalping may not be the right trading style for you. Stick with swing trading.
What Is Your Experience Level?
Because scalping is such a fast-paced, high-stakes trading style, it is definitely not recommended for beginners. In fact, scalping is really only recommended for seasoned traders. You can get started as a swing trader with no experience at all, on the other hand. In fact, getting started with swing trading with a small account is one of the best ways to dip your toes in the water as a trader. You can learn how to swing trade pretty quickly and hit the ground running fast.
Swing Trading vs Scalping: The Verdict
By factoring in the pro and cons of swing trading and scalping alike, you can pretty easily see which style best suits you. There really is no right or wrong answer. If you like fast-paced, high-pressure scenarios and have ample trading experience: consider scalping. If you want to be more calculated and methodical, spend less time in front of screens, and earn larger profits per trade: consider swing trading.
And, honestly, you don’t have to just choose one or the other. While we do discourage novice traders from scalping, you can try both once you’re more experienced and confident. This is the best way to see how you prefer to trade.
All things considered, we encourage you to get started with swing trading. It is suitable for all traders, from beginners to seasoned veterans.
Final Thoughts On Scalping vs Swing Trading
That concludes our breakdown of scalping vs swing trading. As you can see, there are striking differences between the two styles – just as with swing trading vs investing long term or swing trading vs trend trading. There are all sorts of other strategies out there for you to explore as well.
But, no matter which style you ultimately go with – you need the right tools in your arsenal. Set yourself up for success with the most intuitive, accurate stock forecasting software on the market: VectorVest. With this tool, you can make the most informed decisions possible and simplify trading. It gives you clear buy, sell, or hold recommendations for any given stock.
Both swing traders and scalpers alike need to be able to effectively time the market to execute profitable trades at a high rate of success. And there is no software that times the market as accurately as VectorVest. In fact, we’ve called every major market move for decades. Stay ahead of the curve and try it out risk-free for 30-days – once you see the way it transforms your trading strategy, you’ll be glad you did.