Swing Trade and Day Trade, what's the difference?

This week has been a challenge to my health. I was diagnosed with TMJ/TMD in my jaw which is giving me extreme pain. I can barely open my mouth to eat. Hoping to lose some weight! Despite that, I had a wonderful 51st birthday yesterday and celebrated with my sweet family. I feel like at 51 I have been given a gift of a supportive husband who is behind my trading 100%. Best gift ever!

My trading update is that I am up almost $150 for the week in the simulator. I took a trade in my investment account which gave me a positive gain. Slowly I am working out a strategy in the simulator and then testing it in very small position sizes in my investment account.  My philosophy is slow and steady wins the race.

In thinking about this blog post topic today I decided it would be helpful to explain the difference between a day trade and a swing trade because I will be talking about both as we journey along. In plain English, Day Trading is when you buy a stock and sell it in the same day. Swing trading is when you buy a stock and sell it the next day or over the next couple of weeks. For more formal definitions see below....

What is Day Trading?
Securities & Exchange Commission Day Trade Definition

FINRA rules define a “day trade” as the purchasing and selling or the selling and purchasing of the same security on the same day in a margin account.  This definition encompasses any security, including options. Selling short and purchasing to cover a position in the same security on the same day is also considered a day trade.

Exceptions to this definition include:

a long security position held overnight and sold the next day prior to any new purchase of the same security; or
a short security position held overnight and purchased the next day prior to any new sale of the same security.

What Is Swing Trading?

Swing Trading

Swing trading is a style of trading that attempts to capture gains in a stock (or any financial instrument) over a period of a few days to several weeks. Swing traders primarily use technical analysis to look for trading opportunities. These traders may utilize fundamental analysis in addition to analyzing price trends and patterns.

Most of us are long term investors looking for a stock to increase in value over the long term, one year or more. That has been my strategy for many, many years and it has worked well while I was employed full time. I am sure that is what most of you do but I want to broaden your investment horizon as I take this leap of faith.  

Namaste and Trade Another Day,

Michelle