People often confuse trading with day trading and hence the term “GAMBLING” as the common thinking is that day trading is gambling. I would never advise day trading for anyone, especially for physicians. Lets first see the differences between Day trading and Swing trading.
Day Trading: When a Trader buys and sells stocks/financial instruments within the same day. What I mean by financial instrument is that it can be a stock, ETF, or options. For example, you buy 100 Apple stocks on a Monday at 10 am at 175$ and sell them all at 11 am at 176$ making a profit of 100$.
Day trading requires a lot of time commitment. You need to spend so much time everyday listening to news, preparing charts with different timeframes and coming up with a plan. People do this successfully but they are a rare breed and they do this full time. As physicians you do not have the time to be consistently profitable from day trading if you are working.
Still, many doctors often try day trading and get burnt. Most of them do not do their due diligence and often go with what they read/heard or he said/she said. They do not properly assess the risk/reward ratio. It may look like they are winning in the beginning but at the end most lose money. No one should be day trading let alone physicians unless you understand all aspects of it and have a strategy/plan and sticks to it.
Swing Trading: Swing trading is when you buy and hold the stocks/financial instruments for more than a day up to many weeks or months. The main difference between the two types is the number of days you hold on to these stocks.
Why do I think swing trading is superior to day trading?
# A stock doesn’t appreciate in value in one day to give you good gains. You have to trade multiple stocks, multiple times a day as a day trader to get sizable returns ( If you are lucky )
# Preparation takes less time once you establish your Trading plan/strategy.
# You don’t need to look at the stock multiple times a day.
| DAY TRADING | SWING TRADING |
Trade multiple times in a single day | Trade multiple times over days and weeks |
Hold your positions for minutes or hours | Hold your positions for days or weeks and more |
No open positions at the end of the day | Positions are still open at the end of opening the trade |
Spend many hours every day on the preparations. | Spend significantly less time compared to day trading |
Smaller gains and losses depending on the size of your positions. | Greater gains and losses (Losses can be greater too if a stop loss is not followed correctly) |
Not suitable for full time working Professionals | Suitable for full time working Professionals |
More anxiety and stress | Less anxiety and stress compared to day trading |