Scalping and Swing Trading: The Difference.
Swing trading and Scalping are different trading methods that are used by new and advanced traders in the market. In both these 2 methods, traders use different techniques to obtain and maximize profits during their trading period. Although the goal is the same for everyone: to gain profit during each trade, there are differences between the two styles, such as the duration of the trading period, experience level of the trader, and the number of targeted trades and profits.
Scalping is a style in which the trader uses short-term price gaps to make numerous trades in a short trading period. In this method, traders buy and sell in a short time frame using small price gaps to earn profit. On the contrary, Swing trading is a technique in which traders hold the money in their accounts for a more extended period to profit from price changes known as “swings” in the market. This prominent method is often used by individuals who cannot monitor trends on the markets every day, such as full-time workers. In the swing trading method, selling and buying are based on swings on a medium-term trend. If there is an uptrend, the individuals will buy “swing lows,” while the individual would sell “ swing highs” during a downtrend.
The Differences between Scalping and Swing Trader:
The Duration Of The Trading Period
- Scalping: In this method, the individual needs to give his/her full attention every day because there can be quick price gaps occurring in the market to earn potential profit.
- Swing Trading: In this method, the trader holds the money in the account for a longer period such as days or weeks to earn profit based on the swings from the medium-term trend.
Experience Level Of The Trader
- Scalping: Experienced Traders usually use this method because they comprehend more about trend structures and potential inclination that can occur.
- Swing Trading: This method is ideal for beginners or experienced traders because it does not require a lot of time. Though knowledge regarding the market and how trends work is crucial, it is not as hard in contrast with scalping.
Number Of Targeted Trades And Profit
- Scalping: Traders target 10 pips or 20 pips, which depends on the market trends. In this method, profit can be earned in a short time frame.
- Swing Trading: Traders target 100 pips, 200 pips, or 500 pips, dependent on the market trends. In this method, individuals can earn profit in a longer time frame.