What is Intraday trading, and how it’s different from Swing trading

Intraday trading is referred to as day trading in the stock market. In this article, we will discuss what is day/intraday trading and how it differs from swing trading, and most importantly what are the things you need to understand to get started your stock trading career.

We have two camps of traders: the day traders and the swing traders. In both cases, traders try to profit from stock’s short term price movements.

Many retail traders make a living from trading stocks and other securities.

Both intraday and swing trading can help you to make money from the comfort of your home. 

Now let’s understand what is intraday or day trading in the stock market.

What is intraday or day trading

In intraday/day trading, traders hold their position in securities only for a day, this means they buy and sell one or more common stocks within one trading session. At the end of every day, they close their position and then start all over again the next day. They do not hold their position more than a day, that is why they are called day traders.

Intraday or Day trading is a business. These traders always have a trading plan for what they will trade, when to enter and exit a position, how to protect trading profit, and most importantly how to minimize loss of capital.

How day trading is different from Swing Trading

We have already discussed swing trading in our last article, you can read it here swing trading in the stock market.

Both intraday and swing trading has its own advantages and drawbacks. Traders should choose the one that best suits their skills, experience, preference, and lifestyle.

In this part of the article, we will restrict our discussion to understand the difference between intraday and swing trading.

Here are the major differences;

  • Based on technical analysis and charting system, day traders enter and exit the number of trades in a single day. Whereas swing traders based on expected swing in stocks and other securities, hold their position for a few days to weeks and in cases for few months. This means day traders do not keep any securities overnight, whereas swing traders do.
  • A day trader is required to be a full-time trader as he/she has to sit for the whole day finding and monitoring trades and markets. A swing trader not necessarily makes trading as a full-time career, he/she can work as a part-time swing trader in addition to the full-time day job.
  • Margin requirements in case of swing trading are higher in comparison to intraday trading as the trader needs to hold the position for more than a day.
  • You can start swing trading with just one computer and conventional trading tools. In the case of intraday or day trading, you need to have the state-of-the-art technology of day trading.
  • Day/intraday traders not required to do a fundamental analysis of stock as entry and exit points decided purely on the basis of technical analysis. Swing traders are required to apply a combination of fundamental and technical analysis instead of relying only on technical analysis.

Successful day traders pick one or two markets and concentrate on those to maintain focus. Before getting into a trade, these successful traders know when they are going to trade, what will be their stock, and most importantly when they are going to get out their position.

Traders rarely place all of their money on one trade. Instead, they put a portion of their capital into a trade and keep rest to make other trades when a new opportunity arises.

Remember, when you trade, the market does not care who you are, what you are doing, what are your goals, and how you want to achieve it.

To be a successful day trader here are certain technical terms you must know;

  • Fibonacci series
  • Kelly criterion
  • Pattern day trader
  • Wash-sale rule
  • Average true range
  • Bollinger Bands
  • Commodity Channel Index (CCI)
  • Momentum
  • Relative Strength Index (RSI)
  • Different type of brokerage orders

Day traders are considered as speculators working in zero-sum markets. Speculators looking for profit from price changes.

Day trading isn’t investing, it does not mean that day traders don’t invest in stocks and other financial assets. Most of the renowned investors are day traders. They withdraw their trading capital on a regular basis to put it into investments for better retirement life.

is a fellow member of the Institute of Chartered Accountants of India. He lives in Bhubaneswar, India. He writes about personal finance, income tax, goods and services tax (GST), company law and other topics on finance. Follow him on facebook or instagram or twitter.