After getting my hands burned, I have realized one thing that intraday trading can be pretty dangerous. I misread the initial trend of a stock and lost around ₹1500. I have written about intraday trading basics here: Intraday Trading on Zerodha

Swing Trading

Unlike Intraday, in Swing trading position can be held for more than a week or so. It is not long term where we buy and keep the shares like forever.

I usually keep stocks for 2 to 4 days. I keep it for a longer period only if the stock is not making a profit. Swing trading is kind of a sure way to make some profit but not 100%. It depends on the company that you are investing in and other external factors like natural calamities, govt policy changes, war etc.,

Since there is so much risk, I prefer well-established companies to invest. Many times, I invest in companies whose service I’m using on a regular basis. For example HDFC

Here is a table comparing Intraday Vs Swing trading

Factor Intraday Swing
Profit/Loss probabilityHighLow
Margin AvailabilityYesNo
Attention span requiredHighLow

Why not Intraday if Profits can be high

In intraday, we can obtain margin(extra amount offered) from the trading platform to buy a lot more(usually around 10X) shares than we can normally afford. In a way it is good if we make a profit we make a good one, if we don’t, we can also make a huge loss.

As I told earlier, I experienced this when I was trading 500 shares of SBIN. ₹1500 loss in a day is big for me. I will make it back but I can’t be sure. I can make another loss as well.

Intraday needs your full attention. If you haven’t configured a stop-loss then you will have to be tracking the chart all day long. So it becomes kind of a 9 to 6 job. If you’re free all day long then awesome, go for intraday. For me though, I’m not free all the days. I’m only free on some days when the workload is less.

Why Swing Trading?

Since I can’t be checking the chart all day, I prefer Swing trading. Even if I miss a day, it will not make a big difference. It does not need your attention all the time.

I usually log in at 9:15, watch the trend, create order with preset targets and log out. If the target meets then the trade happens, if not I can do it again the next day.

But trading the next day comes under BTST(Buy Today Sell Tomorrow). There are certain risks involved. Because in CNC, stock is delivered only on T+2nd day. So if you buy on Monday, it is safe to sell on Wednesday. Similarly, if you buy on Friday, it is safe to sell on Tuesday.


How to select stocks for Swing Trading?

If you observe the economy of our country, the trend is always been upwards.

Indian Stock market trend

The overall growth of the companies is positive. So for a long-term investor it is easy to make decisions. Find a company with a good balance sheet and rapport and invest. But for an intraday trader, this data doesn’t help much.

Swing traders come in between these two categories and for us, only the current trend matters. We have to look for the trend in recent times.

For example, after Indian Government demonetizing high-value notes and after Jan Dhan Yojana, bank sector is doing pretty well. This is because of the new policies by the govt where everyone needs to have a bank account. Anyone who could foresee this makes a big profit in swing trading.

So no Day trading?

No. Intraday trading still an option when there is a huge volatility in the market on a particular day. I was watching Airtel stocks today and it went way too high in the first 10 minutes.

Intraday airtel stock zerodha

I did not want to miss this opportunity because usually when a stock goes this high, it always comes back to normal the same day.

I sold shares using margin and then bought them for a lower price in the afternoon. So I was pretty sure this is going to work. I’m going to trade intraday only if I’m sure of making a profit.

Profit and Loss Report

I’m thinking post profit and loss report every month to show what my actual profit was. Net realized profit can be lower than the realized profit because there will be brokerage charges and taxes to pay.