The trading styles, side by side
Scalping
- A trade usually lasts
- Seconds to minutes
- How often
- Very many trades in a day
- Held overnight?
- No
- Charts usually watched
- Ticks and one-minute charts
- Size of move looked for
- A few pips
- Cost that weighs most
- Spread and commission
- Time at the screen
- Constant, while trading
Day trading
- A trade usually lasts
- Minutes to hours
- How often
- A few trades in a day
- Held overnight?
- No
- Charts usually watched
- Five-minute to hourly charts
- Size of move looked for
- Part of one day’s range
- Cost that weighs most
- Spread and commission
- Time at the screen
- Most of a session
Swing trading
- A trade usually lasts
- Days to a few weeks
- How often
- A few trades in a month
- Held overnight?
- Yes
- Charts usually watched
- Four-hour and daily charts
- Size of move looked for
- One swing within a larger move
- Cost that weighs most
- Overnight financing
- Time at the screen
- A check or two a day
Position trading
- A trade usually lasts
- Weeks to months, sometimes years
- How often
- A few trades in a year
- Held overnight?
- Yes
- Charts usually watched
- Daily and weekly charts
- Size of move looked for
- A whole trend
- Cost that weighs most
- Overnight financing
- Time at the screen
- A check or two a week
How to read this table
Read left to right and the holding time grows from seconds to months. As it grows, the cost that weighs most changes from what is paid on each trade to what is paid each night. The borders between the styles are loose, and nothing in the table says one is better: they are descriptions of how people trade, not a ladder to climb.
Each one, in a paragraph
Scalping
Scalping is trading for very small moves, many times over. A position is open for seconds or a few minutes. Because each trade aims at so little, the spread and any commission are a large part of every result, and the speed and quality of execution matter more than in any other style. It asks for unbroken attention. Some providers restrict it, so their terms are worth reading first.
Day trading
Day trading opens and closes positions within one day, so nothing is held when the market shuts or the trading day rolls over. That avoids overnight financing and the gaps that can open between one session and the next. It is still frequent trading: costs are paid often, and the hours are those of the session being traded.
Swing trading
Swing trading holds a position for days or a few weeks, looking for one leg of a larger move. Trades are fewer, so the spread counts for less, and positions are held overnight and over weekends, so financing charges and gaps count for more. It can be followed without watching every hour, which is why it is often described as the style that fits around other work.
Position trading
Position trading holds for weeks, months or longer, on a view of a long trend, often formed from economics as much as from a chart. A handful of trades a year means the spread hardly matters. What matters is the cost of holding: financing charged every night for months, and the wide swings a long hold must sit through, which on margin require room in the account.
Show me two side by side
Choose any two. The rows on which they give different answers are marked; the rest are the same for both.
Scalping and Day trading differ on 5 of 7 rows and give the same answer on 2.
- A trade usually lastsDiffers
ScalpingSeconds to minutes
Day tradingMinutes to hours
- How oftenDiffers
ScalpingVery many trades in a day
Day tradingA few trades in a day
- Held overnight?The same
ScalpingNo
Day tradingNo
- Charts usually watchedDiffers
ScalpingTicks and one-minute charts
Day tradingFive-minute to hourly charts
- Size of move looked forDiffers
ScalpingA few pips
Day tradingPart of one day’s range
- Cost that weighs mostThe same
ScalpingSpread and commission
Day tradingSpread and commission
- Time at the screenDiffers
ScalpingConstant, while trading
Day tradingMost of a session
One invented path, four lengths of hold
A drawing of the mechanism. Choose one of the trading styles beneath it and the sentence says what the drawing shows.
A scalp is the thinnest mark on the path: on three invented months it would be narrower than a hair, so it is drawn wider than it is.
Three months of invented prices. The bands show how much of the path one trade of each style would span. Not market data.
Questions people ask
- What is the difference between day trading and swing trading?
- A day trader closes every position before the trading day ends and holds nothing overnight. A swing trader holds for days or weeks. The day trader pays the spread more often and avoids overnight financing and gaps; the swing trader pays the spread less often and accepts both.
- Which trading style is best for beginners?
- No style is best in general, and none makes trading safe. They differ in the time they ask for, the costs they meet and the pace of decisions. Faster styles leave less time to think and pay costs more often; slower styles need patience and room for wider swings. Trading with leverage carries a high risk of loss, whatever the style.
- Is scalping allowed everywhere?
- Not always. Some providers set a minimum time for which a position must be held, or other limits on very frequent trading. The provider’s own terms say what is allowed.
The words on this page
A general explanation for study. It is not advice or a recommendation, it does not say which of these to use, and it does not describe the terms of any account.