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Day Trading vs. Swing Trading vs. Investing - Pros and Cons

By RAIN EDITORIAL TEAM - Apr 28, 7:00 PM

When dealing with crypto assets, one has multiple approaches to choose from. Day traders tend to execute numerous orders within short periods of time, swing traders usually only buy or sell every few weeks, and many investors keep their positions mostly untouched for months, or even years. In this article, we’ll explore all the pros and cons of these styles, and help find the one that fits you best.

What is day trading crypto? Day trading pros and cons

Day trading cryptocurrencies refers to multiple buy and sell orders on a daily basis over a longer period of time. The basis of most day traders is technical candlestick chart analysis that mostly consists of pattern spotting and short-term price predictions.

Because of the amount of actions, day traders tend to aim for the smallest profits per trade of any other category, and take higher risks in the process. There is no exact number that needs to be reached, and the goals vary from person to person, but 1-3% gain per trade is usually a great result for any day trader. If this seems low, consider the fact that these profits are potentially realized a few times on a daily basis, which results in multiple hundred percent gains on a yearly level. 

The pros of day trading is the potential gains it can result in, however, that comes at a cost of the highest risk among all other types of trading, which is its biggest con.

What is swing trading crypto? Swing trading pros and cons

Swing trading is when there is more time between executed orders, which can range anywhere from a week to a month or two, with the common aim of low double-digit percentage gains. Contrary to day traders who primarily consider candlestick charts, indicators, and patterns during their time, many swing traders opt for far less technical solutions, such as conventional line charts, and basic indicators.

Generally speaking, the number one aspect swing traders base their trades upon is news and trends surrounding assets. A rumor about a potentially positive future update or event about a crypto token, for instance, could be a buy signal for swing traders, while the day of the actual update might result in selling positions. 

The amount of time required for swing trading is a definite pro, as this activity only needs a few hours every once in a while. However, because of this, swing traders are less likely to catch quick up or downtrends, which limits their profit potential.

What is investing in crypto? Investing pros and cons

Many consider investing the least exciting forms of engaging with cryptocurrencies, however, almost everyone argues that it is the safest form of all in terms of distant future gains. Investing is referred to when positions are bought for long-term holding purposes, and only a few new trades occur every other month, or even year (excluding portfolio rebalancing). Despite the fact that investing is often titled slow paced, but the most secure form of owning cryptocurrencies, it does carry a certain level of risk. 

When it comes to time dedication, investing demands the least among all other forms of trading on a yearly basis, which makes it appealing for a wide audience. However, with potentially reduced risks come likely lowered profits: no more than double-digit gains on a yearly level are considered realistic for most investors.

While day trading, swing trading, and investing might seem somewhat separated and far apart, they actually share many elements and are by no means mutually exclusive. This means, for instance, that day traders can have long-term investing accounts, and vice-versa. If you can’t decide which matches your preferences the most, start with investing, and if you find that only more would suffice your needs, work your way towards swing trading, and potentially day trading later on. In any case, the most important thing is to start now and establish the future you want today.

Rain is licensed by the Central Bank of Bahrain as a Category 3 Crypto-Asset Services Provider. We are headquartered in the Kingdom of Bahrain

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