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The 3 Types of Trading: Intraday, Day, and Swing

by | Tips & Strategies

Active futures traders use a variety of analyses and methodologies. From ultra short-term technical approaches to fundamentals-driven buy-and-hold strategies, there are strategies to suit everyone’s taste.

For a new trader entering the futures marketplace, developing a comprehensive strategy can be a daunting task. A good starting place for beginners is to study the three types of active trading:

  • Intraday
  • Day
  • Swing

The key difference between these three styles is duration — the length of time a trader holds an open position in the market. As a trade’s duration increases, so does the trader’s exposure to systemic risk.
Read tips and tricks compiled from the advice of experienced futures brokers in our e-book:Basic Training for Futures Traders

Intraday Trading

As the name implies, intraday trading occurs on short time frames within a single session. Traders manage open positions in terms of seconds, minutes, and hours, with the objective of capitalizing on rapid fluctuations in price.

Most intraday trading systems are rooted in technical analysis. The study of price action itself is conducive to crafting decisions on compressed timeframes. Here are a few types of trading strategies exclusive to the intraday approach:

Markets that offer substantial depth and liquidity are optimal for intraday trading. Entering and exiting the market efficiently is the key — insufficient liquidity increases trade-related costs associated with spreads and slippage.

Intraday strategies depend on realizing small profits while assuming limited risk repeatedly to create profitability. Futures products, such as WTI crude oil and the E-mini S&P 500, are ideal targets for intraday traders.

Day Trading

In contrast to the intraday approach, day trading is the discipline of opening a position in a given market only to make an exit at the closing bell. Although there are some similarities to intraday, day traders do not typically deal in high volumes. Instead, a day trader identifies a premium opportunity early in the trading day and then executes it on a session-by-session basis.

There are several popular types of trading ideal for the daily timeframe:

Characteristics of a target-rich day trading market are a considerable range and inherent volatility. While most intraday strategies rely heavily on technical analysis, liquidity, and price action to prove valid, day trading strategies frequently incorporate various aspects of fundamental analysis as well.

Swing Trading

Swing trading is the buying and selling of futures or commodities on a multisession basis. The unique characteristic of swing trading methodologies is that open positions are held through at least one session or close. Swing trades commonly last anywhere from two to six days but may extend several weeks.

Swing traders are more reliant on fundamental analysis than intraday or day traders. Although swing traders may use technical tools and indicators to refine a trade’s entry point, traditional fundamentals, including macro-trends and geopolitics, play key roles in their trade selection and management.

Holding an open position through a market’s close requires a swing trader to contemplate several unique considerations:

Swing trading is a popular approach to engaging equities, forex, and agricultural futures. Fundamental market drivers — such as seasonality, corporate earnings releases, or central banking policies — are common components of swing trading systems.

Understanding the Three Types of Trading

Achieving longevity in the marketplace depends greatly upon choosing the style best suited to your available resources, capabilities, and personality traits. However, no matter which type of trading is your preferred style, successful implementation requires discipline, dedication, and tenacity.

Properly aligning your available resources and trade-related goals is a big part of succeeding in the futures marketplace. With more than 20 years of experience in the financial markets, the team at Daniels Trading can help make your journey into the marketplace a productive one.

Basic Training for Futures Traders

Risk Disclosure

The StoneX Group Inc. group of companies provides financial services worldwide through its subsidiaries, including physical commodities, securities, exchange-traded and over-the-counter derivatives, risk management, global payments and foreign exchange products in accordance with applicable law in the jurisdictions where services are provided. References to over-the-counter (“OTC”) products or swaps are made on behalf of StoneX Markets LLC (“SXM”), a member of the National Futures Association (“NFA”) and provisionally registered with the U.S. Commodity Futures Trading Commission (“CFTC”) as a swap dealer. SXM’s products are designed only for individuals or firms who qualify under CFTC rules as an ‘Eligible Contract Participant’ (“ECP”) and who have been accepted as customers of SXM. StoneX Financial Inc. (“SFI”) is a member of FINRA/NFA/SIPC and registered with the MSRB. SFI does business as Daniels Trading/Top Third/Futures Online. SFI is registered with the U.S. Securities and Exchange Commission (“SEC”) as a Broker-Dealer and with the CFTC as a Futures Commission Merchant and Commodity Trading Adviser. References to securities trading are made on behalf of the BD Division of SFI and are intended only for an audience of institutional clients as defined by FINRA Rule 4512(c). References to exchange-traded futures and options are made on behalf of the FCM Division of SFI.

Trading swaps and over-the-counter derivatives, exchange-traded derivatives and options and securities involves substantial risk and is not suitable for all investors. The information herein is not a recommendation to trade nor investment research or an offer to buy or sell any derivative or security. It does not take into account your particular investment objectives, financial situation or needs and does not create a binding obligation on any of the StoneX group of companies to enter into any transaction with you. You are advised to perform an independent investigation of any transaction to determine whether any transaction is suitable for you. No part of this material may be copied, photocopied or duplicated in any form by any means or redistributed without the prior written consent of StoneX Group Inc.

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